Macroeconomic Policy Revision - Fiscal Policy

Just some notes I made at school. Sorry about how scrappy the last diagram looks - I couldn't find it anywhere on the internet so had to make half of it in Paint... :P I think these notes are fairly comprehensive but please say something if you think of anything that could be added.

Hope they help!

~James

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  • Created by: origen5
  • Created on: 02-04-15 17:04

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Macroeconomic Policy Revision Notes - Fiscal Policy

Definition: Control of the economy via the use of taxation and government spending

Fiscal policy is split into two categories: Expansionary Policy, and Contractionary Policy

Expansionary Fiscal Policy:(Increased government spending, decreased taxation - Increases
AD)


1) Increased government spending on current
(eg. teacher…

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Drawbacks of Fiscal Policy:

1) Time Lags: - Fiscal policy changes are only officially made once per year as part of the
budget, so changes may come too late to deal with problems such as rising unemployment and
demand-pull inflation due to the cyclical nature of the economic cycle. There…

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