What is a contractionary fiscal strategy?
Glossary. Fiscal policy that reduces aggregate demand by cutting government spending or increasing taxes. Fiscal policy that expands aggregate demand through government spending increases or decreases.
What is a contractionary fiscal policy quizlet?
Contractionary Fiscal Policy involves decreasing government spending or increasing taxes, which leads to a decrease in aggregate demand. Progressive tax systems will increase taxation when income increases and decrease taxation when income decreases.
Who is responsible for fiscal policy quizlet?
Who is responsible for fiscal policies? Fiscal policy is governed by the federal government. You just studied 14 terms!
What are the three goals of fiscal policy?
The main goals of fiscal and monetary policies are to attain or maintain full employment, to maintain high rates of economic growth and to stabilize wages and prices.
What tools are used in fiscal policy?
The two major tools of fiscal policy include taxes and spending. The economy is influenced by taxes. They determine how much money the government should spend in specific areas and how much each individual should spend.
What is fiscal policy and its features?
Arthus Smithies says that Fiscal Policy refers specifically to government spending, borrowing, and ‘taxing’.
What are the main components of fiscal policy?
The four major components of fiscal policy include (i) spending, budget reform, (ii), revenue (particularly tax revenue) mobilisation, (iii), deficit containment/ financing, and (iv) determining fiscal transfer from higher to lower levels.
What is contractionary fiscal policy and when is it used?
Contractionary fiscal policy is a form of fiscal policy that involves increasing taxes, decreasing government expenditures or both in order to fight inflationary pressures. An increase in taxes means that households have less disposable income to spend. Lower disposal income decreases consumption.