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Who is in charge of making fiscal policy? What fiscal policy measure has a direct impact...

Who is in charge of making fiscal policy? What fiscal policy measure has a direct impact to the economy? If consumer confidence is low, which of the following will be the most effective fiscal policy? An increase in government spending, or An equal decrease in taxes? Explain your reasoning.

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Answer #1

The formulation of the fiscal policy lies in the hands of the Federal Governments of every country.The fiscal policy is the divided into two types Contractionary and Expansionary policies used according to the monetary condition of the economy this policy has both directly and indirectly affected the working of the economy.

The Above situation is related to the deflationary situations int he economy.During this time Expansionary fiscal policy works the government spending on various activities most effective when compared to reduce the taxation rate

Because the government spending encourages investment and employment. The reducing th taxation rate does not affect much for the level of the consumption in the economy.However, these two tools are complementary to each other.

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