What are the three main ways that fiscal policy affects the macro economy ? How each channel of policy works?

Question

What are the three main ways that fiscal policy affects the macro economy ? How each channel of policy works?

Answer 1

fiscal policy may affect macro economy through T and G and that affects C, S, I and NX

eg. G increases leading to rise in C and fall in S and rise in GDP and vice versa

similarly T decreases leading to rise in Yd(disposable income) and rise in C and rise in GDP and vice versa

government may also invest directly increasing G and AS leading to a higher GDP

so there are a number of ways how fiscal policy can be transmitted