What is the definition of fiscal policy and what are the main differences between an expansionary fiscal policy and contractionary fiscal policy

Fiscal Policy is policy designed by the government in order to influence levels of government spending and taxation. In an expansionary fiscal policy the government will opt to increase government spending on goods and services and reduce taxes to increase the disposable income of consumers. In a contractionary fiscal policy the government will opt to reduce government spending and increase taxation in order to generate government revenue and curb consumer spending in order to reduce inflationary pressures.

AK
Answered by Adam K. Economics tutor

2275 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

If the Marginal Social Cost of Producing a good is higher than the marginal private cost -what has happened?


Evaluate the case for government provision of goods and services such as flood defence schemes.


Please can you help me to understand the concept of price elasticity of demand (PED)?


How to define the term "external costs"


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences