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.

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Answered by Matthew D. Economics tutor

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