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