Types of Fiscal Policy

Types of Fiscal Policy - Types of Fiscal Policy The...

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Unformatted text preview: Types of Fiscal Policy The government has control over both taxes and government spending. When the government uses fiscal policy to increase the amount of money available to the populace, this is called expansionary fiscal policy. Examples of this include lowering taxes and raising government spending. When the government uses fiscal policy to decrease the amount of money available to the populace, this is called contractionary fiscal policy. Examples of this include increasing taxes and lowering government spending. There is another way to interpret the terms expansionary and contractionary when discussing fiscal policy. If we look at the effects of fiscal policy on the economy as a whole rather than on the individual, we see that expansionary fiscal policy increases the output, or national income, while contractionary fiscal policy decreases the output, or national income. Thus, there are two basic classes of effects of fiscal policy, those that deal with the individual and those that deal...
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This note was uploaded on 02/09/2012 for the course ECO ECO2013 taught by Professor Jominy during the Fall '08 term at Broward College.

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