demand side policies

Question 1

what does a fiscal policy involve

Answer 1

the use of govt spending, taxation and govt borrowing to affect the level and growth of AD, output and jobs

Question 2

what is a cyclical fiscal deficit

Answer 2

a budget deficit caused by the economic cycle, particularly when the economy is in a recession

Question 3

what are some general considerations the. considering to use fiscal policy

Answer 3

-can quickly maintain/ stimulate demand in times of a reccesion
-not effective when economy is already working at full capacity
-depends in the MPS/MPC of this affected changing the size of the multiplier effect