Fiscal policy covers the taxation and spending decisions of a governtment. the government can change tax rates, and the composition, amount and timin of government spending.
The aim of fiscal policy is to influence AD. the government can raise AD either by incresing its own Spending decision or by reducing taxation. (Gs) is componento of AD.
It could spend on e.g computers in school which will directly increase AD. This higher spending will also be likely to have a multiplier effect, causing AD to rise even further.
A cut in income tax will increase people's disposalbe income. This will raise consumption and again AD. lower corporation tax would tend to increase
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