Unit 3.6 · Demand Management (Fiscal Policy)
Expansionary and Contractionary Fiscal Policy
AO3AO4Diagram required
Syllabus Requirement
Use of fiscal policy to close deflationary/recessionary and inflationary gaps in both Keynesian and monetarist models.
Assessment Objectives
AO3Synthesis and Evaluation
AO4Use of Appropriate Skills
Summary
Expansionary and contractionary fiscal policies are tools used by the government to influence aggregate demand. Expansionary fiscal policy aims to boost economic activity, while contractionary fiscal policy seeks to reduce it. Understanding these policies is essential for analyzing how governments manage economic fluctuations.