Contractionary fiscal measures, such as less government spending and tax increases designed to reduce budget deficits, are called fiscal policy.
The use of government expenditure and taxes to control the economy is what is known as fiscal policy. Governments typically use fiscal policies to promote strong, sustainable growth and reduce poverty. During the recent global economic crisis, the role and purpose of fiscal policy became more important as governments intervened to support the financial system, promote growth, and mitigate the impact of the crisis on vulnerable groups. Policy makers have two primary tools at their disposal when trying to influence the economy: monetary and fiscal policy.
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