What is Fiscal Policy

Fiscal policy, in simple terms, is an estimate of taxation and government spending that impacts the economy.

 

Types of fiscal policy

 

There are two types of fiscal policy:

 

Expansionary fiscal policy: This policy is designed to boost the economy. It is mostly used in times of high unemployment and recession. It leads to the government lowering taxes and spending more, or one of the two. The aim is to stimulate the economy and ensure consumers' purchasing power does not weaken.

 

Contractionary fiscal policy: As the term suggests, this policy is designed to slow economic growth in case of high inflation. The contractionary fiscal policy