Fiscal policy can be expansionary or contractionary, depending on whether the government increases or decreases spending and taxes.
Fiscal policy refers to the government's use of taxation and spending to influence the economy. It involves adjusting government spending levels and tax rates to achieve macroeconomic goals such as controlling inflation, reducing unemployment, and promoting economic growth.
Expansionary fiscal policy is used during recessions to stimulate economic activity, while contractionary policy is used during periods of high inflation to slow down economic growth. Fiscal policy is an important tool that governments use to stabilize the economy and achieve their economic objectives.
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