The Student Room Group

Evaluation for contractionary fiscal policy???

Does anyone know any good evaluations for contractionary fiscal policies?? i know loads for expansionary but cant seem to think of any for contractionary
Reply 1
Original post by maxcovel39
Does anyone know any good evaluations for contractionary fiscal policies?? i know loads for expansionary but cant seem to think of any for contractionary


contractionary fiscal policy= is designed to reduce AD through inc in taxation and reduction in government spending

whether it is effective in reducing AD:

depends upon the initial level of economic activity, if economy is operating close to yfe, concerns about reduction in growth and u/e will not hold significance

depends upon state of government finances, if government is running a budget deficit then contractionary fiscal policy is more viable

it's actually very difficult to think of evaluation. econplusdal says use the same eval points for expansionary just switch it around

Quick Reply

Latest