How can Fiscal Policy impact GDP?

Ans : The fiscal multiplier is what impacts the GDP by fiscal policy. The change in national income to the change in government spending is caused by the fiscal multiplier. The effect of the multiplier can be seen when it is greater or less than one. The overall increase in the GDP is due to the amount of spending leading to an increase in income and consumption. This further increases the income, then consumption, and forms a continuous cycle.