Respuesta :
In order to increase demand and the economy during a recession, the government may lower tax rates or increase spending. On the other side, it can slow the economy in order to fight inflation by raising rates or reducing expenditure.
- Public spending and taxation are used in fiscal policy to influence the economy, particularly macroeconomic conditions. These include overall demand for products and services, inflation, economic growth, and employment.
- Fiscal policy is frequently contrasted with monetary policy, which is carried out by central bankers rather than elected government officials.
- The use of taxation and spending by the government to influence the status of the economy is known as fiscal policy.
- British economist John Maynard Keynes is frequently used while talking about fiscal policy.
- Keynes believed that governments might manage economic production and stabilize the business cycle rather than waiting for markets to correct themselves.
- An expansionary fiscal strategy lowers tax rates or raises spending in order to stimulate general demand and advance economic growth.
- A contractionary fiscal strategy raises rates or cuts spending to prevent or reduce inflation.
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