Which of the following are considered main tools of fiscal policy?

The correct answer identifies adjustments in government spending and tax policies as the main tools of fiscal policy. Fiscal policy is fundamentally concerned with the government's approach to managing its budget, which directly influences the economic activity within a country.

Government spending involves the allocation of funds to various services, infrastructures, and welfare programs, stimulating demand and fostering economic growth. When the government increases its spending, it can lead to higher levels of employment, greater production, and increased overall economic output. Similarly, changes in tax policies, including adjustments in tax rates or the introduction of new tax credits, directly affect consumers' disposable income and businesses' ability to invest. Lower taxes can enhance consumer spending and encourage business investment, while higher taxes might achieve the opposite effect.

In contrast, the other options focus on tools associated more closely with monetary policy or trade regulation. Changes in interest rates and bank reserves pertain to monetary policy conducted by the central bank, which influences the money supply and credit conditions rather than direct government spending or taxation. Regulations on private investments do not constitute fiscal policy tools but rather represent measures that could regulate capital markets and influence investment behavior indirectly. Trade tariffs and quotas are instruments of trade policy aimed at regulating international trade rather than managing the country's domestic fiscal situation. Thus, adjustments