Explain the difference between expansionary and contractionary fiscal policies

Define key terms: Expansionary - Used in deflationary gap to cause AD to shift right an stimulate economic growth (accelerator) and Fiscal - A set of government policies that increase the quantity and quality of the factors of production in a given economy by using taxation and government spending.
Draw diagram and explain it using real life example e.g. 2008 depression when the UK government bailed out the banks.

MD

Related Economics IB answers

All answers ▸

Explain one reason why governments impose indirect taxes.


What is the effect of an indirect tax on the cigarette market?


What are the characteristics of a perfectly competitive market structure?


Explain price elasticity of demand and how this may impact government taxation