ECO 372T Principles Of Macroeconomics Wk 5 Discussion
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ECO 372T Principles Of Macroeconomics
ECO/372T: Principles Of Macroeconomics
Wk 5 Discussion – Fiscal Policy
Discussion Topic
Post a total of 3 substantive responses over 2 separate days for full participation. This includes your initial post and 2 replies to other students.
Due
Respond to the following in a minimum of 175 words:
Compare and contrast expansionary and contractionary fiscal policy.
Due
ECO 372T Principles Of Macroeconomics
Reply to at least 2 of your classmates. Be constructive and professional in your responses.
Nathan
28 minutes ago, at 5:35 PM
NEW
“Contractionary fiscal policy is when the government either cuts spending or raises taxes. It gets its name from the way it contracts the economy. It reduces the amount of money available for businesses and consumers to spend.” (The Balance)
“Expansionary fiscal policy includes tax cuts, transfer payments, rebates and increased government spending on projects such as infrastructure improvements. For example, it can increase discretionary government spending, infusing the economy with more money through government contracts.” (Investopedia)
When compared these two policies are basically opposites of each other. Contradictory fiscal policy is used for decreasing the aggregate demand, while expansionary fiscal policy is used for increasing aggregate demand. Expansionary policy spends money, but that spending is used for the betterment of society and on things that we need for our economy and society to run better. Contradictory policy goes against the consumer or citizen in the affect that it has on them. While raising taxes is never ideal or wanted by the average taxpayer, it is something that occasionally has to be done in order to pay for specific and mostly needed things within our society
ECO 372T Principles Of Macroeconomics
References:
https://www.thebalance.com/contractionary-fiscal-policy-definition-purpose-examples-3305791#:~:text=Contractionary%20fiscal%20policy%20is%20when,businesses%20and%20consumers%20to%20spend.
https://www.investopedia.com/terms/e/expansionary_policy.asp#:~:text=Expansionary%20fiscal%20policy%20includes%20tax,more%20money%20through%20government%20contracts.
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Student A
7 hours ago, at 10:55 AM
NEW
Hello everyone, there is a difference between expansionary and contractionary fiscal policy. Our readings this week explained the difference between the two. An expansionary fiscal policy occurs when the goal is to INCREASE aggregate demand. In order to reach this goal, the government increases the government purchases and or decrease the taxes. For example, if the economy is experiencing a recession, the government will utilize this type of fiscal policy to help the economy recover more quickly and effectively. On the other hand is contractionary fiscal policy. This policy occurs when the goal is to DECREASE aggregate demand. In order to reach this goal, the government decreases the government purchases and or increase taxes. For example, if the economy is experiencing a rising of inflation, the government will utilize the fiscal policy to lower inflation. It is important to remember that although these two types of fiscal policies sound similar, they are different. An easy way for me to remember the difference between the two is; expansionary fiscal policy increases aggregate demand as a result to expanding the economy and contractionary fiscal policy decreases aggregate demand as a result to contract the economy.
ECO 372T Principles Of Macroeconomics
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