Question

What is fiscal policy, and who is responsible for fiscal policy? Describe corrective fiscal policy that could be taken if faced with a recession, and how the action would affect the Federal budget deficit.

Answer 1

Fiscal policy is related to Government raising the revenue and expenditure by the government is known as fiscal policy.

The fiscal policy always implemented by the government depending upon the economic conditions example Expansionary fiscal policy implemented during the recession and Contractionary fiscal policy implemented during the Inflation time.

Under expansionary fiscal policy lower taxation, government expenditure through deficit budget, repaying the public debt are the man tools

The federal deficit means expenditure is greater than the revenue it occurs tax cut on the income of the people and corporates.