Stay Ahead with the Power of Upskilling - Invest in Yourself! 
Fiscal policy is the use of government spending and tax policies to affect the level of economic avtivity. It is a sister strategy to monetary policy. According to Keynesian economics, when the government changes the levels of taxation and government spending, it influences aggregate demand and the level of economic activity.
There are two types of fiscal policy:
- Expansionary fiscal policy
- Contractionary fiscal policy
Expansionary policy is the most widely used fiscal policy. It is usually undertaken during recession. In this policy, the government either increases its spending , decreases taxes or both. These measures increase the income levels of individuals which results in increased spending. This boosts demand.
Contractionary policy is basically used to wipe out inflation. In this case, taxes are increased and spending is decreased. This helps in decreasing the aggregate demand.
Click here for government certification in Accounting, Banking & Finance
6 Comments. Leave new
Nice and informative article
Informative.. could have explained more..
Nice. Examples could help your content statements more.
to the point, could have been more explanatory
Good effort..could have done better
Nicely articulated 😀 but note done welll in means of content could have been better if you have exlained it much better 😀 as the topic was looking good and then reading i was in search for more :D. so its ncie work but could ahve made it a little much 😀 elaboratibe