Definition ∞ Fiscal policy refers to the use of government spending and taxation to influence a nation’s economy. Governments employ this policy to manage aggregate demand, stabilize economic growth, control inflation, and reduce unemployment. It involves decisions on budget deficits or surpluses, public investment, and tax rates. These measures are a primary tool for macroeconomic management.
Context ∞ Fiscal policy decisions by governments worldwide significantly impact traditional financial markets and can indirectly influence the digital asset sector. Expansive fiscal measures, for instance, might fuel inflation concerns, potentially increasing interest in inflation-hedging assets like certain cryptocurrencies. Conversely, contractionary policies could reduce overall liquidity, affecting capital availability for digital asset investments. Crypto news often analyzes these policies for their potential market ramifications.
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