What is the purpose of an expansionary fiscal policy?
1 Answer
let's examine the word expansionary to answer this
Explanation:
the word expansionary comes from the word expand, relating to increase, with that, the fiscal policy is a tool used by a finance department to control the economic efforts of a country, the policy houses a group of individual policy objectives that are placed specifically to protect and combat economic shortfalls and inflation.
What that means is that the finance department can increase and decrease both the amount of money allocated for public spending and the tax rates, the idea is to use these measures to control the end users' (consumer) purchasing power.
the question is what is the purpose of an expansionary fiscal policy, the expansionary fiscal policy work to enhance the economic efforts of a country, meaning that, the fiscal policy or the Treasury wants the country to buy more, produce more and pay less in taxes, what it will do as the treasury, it will decrease the tax rates, increase government spending and increase grants producers and consumers receive as an incentive to increase the amount of disposable income.
creating an increase in economic growth, increase in demand for labour (employment)due to the high demand for goods and services and many for social, security and economic benefits.
