How to apply the policy?
- Generally government spending and taxes are changed.
- Different in expansionary and contractionary strategies:
Expansionary - Used in recessions
- Increase public spending (infrastructure, healthcare)
- Cut taxes (increase in consumption)
Contractionary - Used when inflation is high
- Decrease government spending
- Raise taxes
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Economics and politics student from Germany. Interested in a broad field of topics and trying to easily break down topics from his studies to everyone.
In this Mini-Series, we will talk about the key concepts of macroeconomics. I will shortly explain each concept in a respective post. This is part 4 of 5, covering the fiscal policy.
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