Introduction
Fiscal policy refers to the government’s decisions regarding taxation and spending to influence the economy. It can have a significant impact on economic growth, both in the short and long term.
Effects of Fiscal Policy
One of the primary goals of fiscal policy is to stimulate economic growth. By increasing government spending on infrastructure projects, for example, the government can create jobs and boost demand in the economy.
On the other hand, if the government raises taxes to reduce budget deficits, it could lead to a decrease in consumer spending and slower economic growth.
Conclusion
In conclusion, fiscal policy plays a crucial role in shaping the economy. Governments must carefully consider their fiscal decisions to ensure sustainable economic growth.