Evaluate the benefits of using fiscal policy to stimulate economic growth

Intro - define key terms, outline points and conclusion
main points - benefits of increasing government spending and reductions taxation. Increasing government spending eg on education will increase productivity of the work force, increase potential output, AD increase = economic growth (draw AD shift to the RHS) same can be said for reducing tax, more disposable income, can consume more, demand for output increases, output increase = growth caused
counter - other policies that could be used eg monetary policy
evaluation - weakness of fiscal policy: depends what the objective the govt have, myopic decision making, size of policy, duration lasts, information failure
conclusion - fiscal policy is likely to work in the short run but in the long run monetary policy is likely to be more effective Keynesian would support this type of intervention but monetarists would argue against it

Related Economics A Level answers

All answers ▸

Despite a plunge in the value of Sterling during 2016, the UK managed to post the highest current account deficit on record. Why did the plunge in sterling not translate into a reduction in the CA deficit?


Why does the demand curve slope downwards?


Why is inflation desirable?


Focusing on YED, please explain the type of Goods?


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences