How does fiscal policy impact the economy of a country
Discuss the role and significance of fiscal policy in shaping the economic growth of a nation.
- Fiscal policy involves the government's use of taxing and spending to influence the economy.
- Increased government spending can stimulate economic growth by boosting demand for goods and services.
- Tax cuts can provide individuals and businesses with more disposable income, encouraging spending and investment.
- Fiscal policy can help stabilize the economy during economic downturns by increasing government spending to create jobs and support demand.
- Conversely, during times of high inflation, the government can use fiscal policy to reduce spending and increase taxes to cool down the economy.
- Effective fiscal policy can create a favorable environment for sustainable economic growth and development.
Answered
11 months ago