Fiscal Policy

  1. Stances of Fiscal Policy
    1. Expansionary Fiscal Policy
      1. Rationale
        1. Combating Recession
          1. Reducing Unemployment
            1. Stimulating Economic Growth
            2. Mechanisms
              1. Increasing Government Spending
                1. Decreasing Taxes
                  1. Combination Approaches
                  2. Intended Effect on Aggregate Demand
                    1. Stimulating Output
                      1. Raising Employment
                        1. Increasing Consumer Confidence
                        2. Potential Risks
                          1. Inflationary Pressures
                            1. Worsening Budget Deficits
                              1. Crowding Out Private Investment
                            2. Contractionary Fiscal Policy
                              1. Rationale
                                1. Combating Inflation
                                  1. Reducing Economic Overheating
                                    1. Fiscal Consolidation
                                    2. Mechanisms
                                      1. Decreasing Government Spending
                                        1. Increasing Taxes
                                          1. Austerity Measures
                                          2. Intended Effect on Aggregate Demand
                                            1. Slowing Economic Activity
                                              1. Lowering Inflation
                                                1. Cooling Overheated Markets
                                                2. Potential Risks
                                                  1. Rising Unemployment
                                                    1. Slower Growth
                                                      1. Recession Risk
                                                    2. Neutral Fiscal Policy
                                                      1. Definition and Context
                                                        1. Maintaining Budget Balance
                                                          1. When Neutral Policy is Appropriate
                                                            1. Automatic vs. Discretionary Neutrality

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                                                          2. The Tools of Fiscal Policy

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                                                          4. Fiscal Policy in the Macroeconomic Framework