Define the Term Fiscal Policy and Explain How Fiscal Policy

question 15

Essay

Define the term fiscal policy and explain how fiscal policy can be used in response to economic conditions.
D.Roosevelt in the 1930s.When there is an economic downturn,government can increase its spending or cut individual taxes as a means of stimulating consumer (demand-side)spending.When the economy is inflationary,the opposite actions can be taken as a way of dampening consumer demand.Fiscal policy can also take a supply-side form,as it did in part during the Reagan years.Supply-side emphasizes business production and investment.The economy can be stimulated through a reduction in taxes on firms and high-income individuals.

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