How do governments use fiscal policy?

Fiscal policy involves using taxation revenue and government spending to improve the state of the economy. During times of recession and crisis, governments will often use expansionary fiscal policy (lower taxes and increase government spending). This allows consumers and households to retain more of their income, meaning that they continue to spend, and this consumption-led growth can rectify the poor economic climateSimilarly, during booms, governments will employ contractionary fiscal policy to prevent the economy from overheating and to reduce and budget deficits

NS
Answered by Nikhil S. Economics tutor

2089 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is meant by the term 'opportunity cost'


Are taxes an effective way to stop people smoking?


How monetary Policy can be used to stimulate the economy ?


Explain what is meant by the term ‘negative externality’ and explain how excessive consumption of alcohol leads to negative externalities.


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences