A-Level Economics Fiscal Policy Revision Notes

• 1Fiscal policy can be expansionary or contractionary.
• 2Expansionary fiscal policy involves increasing government spending or decreasing taxes.
• 3Contractionary fiscal policy involves decreasing government spending or increasing taxes.
• 4The effectiveness of fiscal policy can be influenced by the multiplier effect.
• 5Fiscal policy decisions are often made in response to economic cycles.

Fiscal policy is how the government uses its money to help the economy. When the economy is slow, the government might spend more or cut taxes to encourage people to spend. When the economy is doing well, it might save money by spending less or raising taxes. This helps keep the economy balanced.