Which branch has the power to tax and spend to influence the economy?

• A. The legislative branch.
• B. The executive branch.
• C. The judicial branch.
• D. State governments.

Answer: (A)

Fiscal policy is the use of taxation and government spending to influence economic activity. At the federal level, the power to levy taxes and to appropriate funds lies with Congress, the legislative branch. This enables Congress to shape budgets, fund programs, and adjust tax policy to expand or curb economic activity. The President can propose budgets and veto or sign legislation, but the authority to create tax laws and approve spending ultimately rests with Congress. The judicial branch interprets laws, not create or allocate funds, and while state governments have their own taxing powers, the question targets the national framework, where the legislative branch handles tax and spending to influence the economy.