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Essay text:
Removing deflationary gap.
2. Fiscal policy during inflation, to control it.
3. Equilibrium in the Balance of Payments: increase taxes on imports, and decrease on exports.
4. Stimulate economic growth.
Principle Weapons of Fiscal Policy:
1. Automatic OR Built-in Stabilizers:
Are those which contribute to keep the economic system in balance without human control ==>These controls are built-in to the economy and so are called automatic or built-in stabilizers:
A. Progressive Income Tax: Reduction in income taxes, increases disposable personal income.
2. Demand Side Fiscal Policy:
The expansion and contraction of fiscal policy can be summed up and brought under two approaches i...
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