1. Explain the difference between an expansionary and contractionary fiscal policy. When, why, and how are they used? Which one is more effective than the other?

Md Ariful Islam

0 like 0 dislike
1 views
Share with your friends

1 Answers

Md Ariful Islam

Call

Contractionary Policy

Contractionary fiscal policy happens when the government and its public agencies lowers its expenditures, while also decreasing spending or increasing taxes at the same time. When a government reduces its spending and/or increases taxes, it leaves a lower amount of capital available for private business, thus causing a contraction of the economy and usually a degree of higher unemployment. This type policy is typically used to control the growth of inflation. 

Expansionary Policy

Expansionary fiscal policy is the flip side of this coin, in which the government raises spending and lowers taxes to boost economic growth. Reduced taxes help private enterprise to invest in major projects, employment, and physical expansion. In today's world, the most appropriate action is a contractionary policy. The global economy has recovered from the great recession of 2008 and it is important to prevent the same type of economic bubbles that occurred in the past. 

https://courses.lumenlearning.com/wm-macroeconomics/chapter/expansionary-and-contractionary-fiscal-policy/

0 like 0 dislike
1 views
Talk Doctor Online in Bissoy App
Two expansionary monetary policy government which can be taken by government? (10 marks) Two expansionary fiscal policy steps which can be taken by government? (10 marks)

Expansionary monetary policiesOpen market operations; this refer to the practice of  buying and selling on the open market in order to manage the amount of money available in banks.Interest rates;...

1 Answers 1 views
How can fiscal policy counter a recession? Are budget deficits a problem? Is fiscal policy a reliable means for controlling the economy?

Fiscal policy is an effective means of regulating the economy. During the period when the economy enters recession, there is a need for a stimulating fiscal policy: a reduction in...

1 Answers 1 views
Explain in details three (3) tools that a government can utilize while deploying expansionary/contractionary Monetary Policy.

1) Open Market OperationsThis is seen clear when central banks buy or sell securities. They are either bought from or sold to the country's private banks. When the central bank buys securities, it adds...

1 Answers 1 views
An increase in the budget deficit is the result of: (2) (a) Expansionary monetary policy; (b) Contractionary monetary policy; (c) Expansionary fiscal policy; (d) Contractionary fiscal policy.

(c) Expansionary fiscal policy

1 Answers 1 views
Differentiate the fiscal and monetary policies.what are the effects of fiscal policy and monetary policy on short run equilibrium of the IS-LM model?

Fiscal policy influences the economy by controlling taxes and government spending. It impacts market of goods.On the other hand, monetary policy controls the money supply in the economy. Only the...

1 Answers 1 views
Is conventional fiscal policy needs revisiting? Read the artical rethinking fiscal policy and discuss the issues?

Conventional fiscal policy needs to be revised because of many reasons.Due to changing and dynamic economies conventional fiscal policies do not provide latest solutions to the economic problems that arise...

1 Answers 1 views
An expansionary fiscal policy might include _ government spending and/or _ taxes, while a contractionary fiscal policy might include _ government spending and/or _ taxes

An expansionary fiscal policy might include increase in government spending and/or reduced taxes while a contractionary fiscal policy might include decrease in government spending and/or increased taxes.

1 Answers 1 views
Q.1.3 An increase in the budget deficit is the result of: (2) (1) Expansionary monetary policy; (2) Contractionary monetary policy; (3) Expansionary fiscal policy; (4) Contractionary fiscal policy.

(1) Expansionary fiscal policy

1 Answers 1 views
Explain when the FED would use a contractionary monetary policy and an expansionary monetary policy, and what the overall result would/could be.

Contractionary monetary policy is when the economic growth lowers down to prevent inflation. The pursue of FED is to control inflation of the economy rate of 2%.However the FED wants...

1 Answers 1 views
Explain when the President and Congress would use a contractionary fiscal policy and an expansionary fiscal policy what the overall result could/would be.

If the President and Congress would use a contractionary fiscal policy and an expansionary fiscal policy, then it couldn't be effective, because these policies are opposite to each other and...

1 Answers 1 views
X