Evaluate the benefits of using fiscal policy to stimulate economic growth

Intro - define key terms, outline points and conclusion
main points - benefits of increasing government spending and reductions taxation. Increasing government spending eg on education will increase productivity of the work force, increase potential output, AD increase = economic growth (draw AD shift to the RHS) same can be said for reducing tax, more disposable income, can consume more, demand for output increases, output increase = growth caused
counter - other policies that could be used eg monetary policy
evaluation - weakness of fiscal policy: depends what the objective the govt have, myopic decision making, size of policy, duration lasts, information failure
conclusion - fiscal policy is likely to work in the short run but in the long run monetary policy is likely to be more effective Keynesian would support this type of intervention but monetarists would argue against it

AG
Answered by Amy G. Economics tutor

1939 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

To what extent is (third degree) price discrimination beneficial to consumers and producers?


What two policies can the government employ to influence economic growth and inflation?


Explain the term 'recession' and analyse two possible causes of a recession.


What is the effect on the UK current account balance following an appreciation of the Sterling?


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