In a general context, the word "fiscal" means "of or pertaining to financial matters." In a policy sense, however, "fiscal" means "relating to government spending and taxes." Therefore, fiscal policy refers to the decisions that a government makes regarding how much to spend and how much to collect in taxes.
Fiscal policy can act in two directions- expansionary fiscal policy and contractionary fiscal policy- and be implemented in two ways- via spending changes or via tax changes. Let's examine how each of these options works.