The Business Cycle And Policies

Question 1

What is the fiscal policy?

Answer 1

Changing taxes and government spending to influence the economy.

Question 2

If government wanted to get the economy out of a recession, what would they do ?

Answer 2

Decrease traces, increase government spending worsening the budget deficit

Question 3

Explain what happens when the Loose Policy(Expansionary Policy) is implemented ?

Answer 3

Government increase spending and decrease taxes, expanding the economy but worsening the budget deficit.

Question 4

Explain what happens in the economy when tight (contractional fiscal policy) is implemented ?

Answer 4

Government decrease spending and they increase taxes, contracting the economy but improving the budget deficit.