QUESTION ONE [25]
“Fiscal policy is the use of government spending and taxation to influence the economy. It seeks to support structural reforms of an economy consistent with long run growth, employment creation and an equitable distribution of income.”
In terms of the above statement, using the two main tools of fiscal policy as the basis for your answer, examine how fiscal policy can be implemented if an economy is in the downswing of a business cycle
Answers to Above Question on Fiscal Policy
Answer 1: The role of fiscal policy is significant in affecting the performance of an economy. Fiscal policy is all about the application of government expanding and taxation in order to influence the economy. In case of downsizing of an economy, physical policy would be of significant help in stimulating economic activity in the economy. The two important tools of fiscal policy such as government spending and taxation are of significant use in shaping the performance of an economy.
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