Basic EconomicsFiscal Policy - FiscalPolicy Expansionary...

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Fiscal Policy Expansionary and Contractionary Fiscal Policy Fiscal policy involves the taxing and spending policies of the government. expansionary fiscal policy (to fight a recession by increasing aggregate demand) 1. increase government spending 2. cut taxes contractionary fiscal policy (to deal with inflation by reducing aggregate demand) 1. decrease government spending 2. raise taxes The Tax System Federal Government personal income taxes social security taxes corporate income taxes excise taxes State and Local Governments sales taxes income taxes propoerty taxes progressive tax tax is a higher percentage of income for those with higher incomes than those with lower incomes proportional tax tax is the same percentage of income for those with higher incomes as those with lower incomes regressive tax tax is a lower percentage of income for those with higher incomes than those with lower incomes
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