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expansionary fiscal policy

Sagot :

Reduction in tax and large amount of  public spending are the two main manifestations of the expansionary fiscal policy.

What is a policy ?

Policy is a legislation, rule, procedure, administrative action, incentive, or voluntary practice of governments and other institutions.

Expansionary policy tries to promote an economy by generating demand through monetary and fiscal stimulus. Expansionary policy is meant to prevent or moderate economic downturns and recessions. An expansionary fiscal policy lowers tax rates or boosts spending to increase aggregate demand and fuel economic growth. A contractionary fiscal strategy raises rates or lowers spending to prevent or reduce inflation.

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