How does the business cycle affect people? How does the government take an active role in controlling the economy?

How can the government affect the economy through fiscal policy?

Business cycles are the "ups and downs" in economic activity, defined in terms of periods of expansion or recession. During expansions, the economy, measured by indicators like jobs, production, and sales, is growing--in real terms, after excluding the effects of inflation.

The U.S. government's role in the economy can be broken down into two basic sets of functions: it attempts to promote economic stability and growth, and it attempts to regulate and control the economy. ... The federal government regulates and controls the economy through numerous laws affecting economic activity.

By adjusting its level of spending and tax revenue, the government can affect economic outcomes by either increasing or decreasing economic activity. ... The government can use fiscal stimulus to spur economic activity by increasing government spending, decreasing tax revenue, or a combination of the two.