Monetary and Fiscal Policy



Monetary and Fiscal Policy

Monetary and Fiscal Policy

Fiscal policy refers to changes in spending and taxing if the federal government. This is for the purpose of contracting or expanding the level of the demand on an aggregate level. During periods of recession an expansionary fiscal policy is implemented which increases the government spending and imposing higher taxes. A recession is a period which requires deficit spending. On the other hand, a budget surplus is required for an overheated expansion. On the other hand, a contractionary fiscal policy requires that the government spends less and increases the taxes. The ...