Respuesta :
Expanding government spending, lowering taxes, or expanding payments to the government are examples of expansionary fiscal policy instruments. Any one of these actions will boost aggregate demand, boosting output, employment, and price levels.
What transpires when fiscal policy is strengthened?
However, if used during sound economic booms, expansionary fiscal policy can have negative effects such as rising interest rates, expanding trade deficits, and accelerated inflation. These unintended consequences of fiscal policy expansion tend to partially counteract their stimulative effects.
What is the normal method the government does to boost the economy?
Governments may prioritize macroeconomic stabilization in the near future. For instance, they might increase spending or lower taxes to boost a flagging economy, or they might cut expenditure or raise taxes to fight growing inflation or lessen external vulnerabilities.
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