CAIE A-Level Economics 5.2.6 Fiscal Policy Stance

Practise distinguishing expansionary and contractionary fiscal policy from tax and spending changes and tracing each stance to aggregate demand, inflation, income and budget…

Exam points

identify lower taxes or higher government spending as expansionary fiscal policy
identify higher taxes or lower spending and a larger surplus as contractionary fiscal policy
trace the chosen stance through disposable income and AD to output, prices and the budget balance

[Maximum number: 1]

What is an example of expansionary fiscal policy?

an increase in income tax

an increase in private sector investment

an increase in spending on public goods

an increase in the money supply

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5.2.6—Fiscal policy stance question 1