Explain Fiscal Policy?

Fiscal policy refers to the government's use of spending to either stimulate the economy or develop public services, or the government's use of certain means such as taxation to generate revenue. The two main stances are: Expansionary fiscal policy- this is when government spending exceeds what it is collecting through taxes, and is usually undertaken during times of economic downturn/ recession. Contractionary fiscal policy- this is when government spending is less than that what it is generating in revenue from taxes- usually undertaken to pay government debt/ "cut the deficit" - George Osborne 2010-2016 Governments utilising Keynesian economic policies such as those of Britain 1945-1979 tend to use both expansionary and contractionary fiscal policies in a cycle.

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Answered by Hubert B. Politics tutor

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