Fiscal policies

• An example of fiscal policies in the UK is in 2015 benefit spendings were cut to those who really needed it
• Expansionary fiscal policy involves an increase in public expenditure and/or a decrease in tax rates
• Expansionary fiscal policy involves an increase in public expenditure, this increase the circular flow of income
• Contractionary fiscal policy involves a decrease in public expenditure and/or an increase in tax rates.
• Fiscal policy is managed by the government and involves using tax revenue and public expenditure to influence the economy
• Discretionary fiscal policy occurs when a government uses their discretion, their ability to make decisions, in order to choose the best policy and make changes. They are actively intervening.
• Automatic stabilisers occur when tax and public expenditure change without government intervention in order to keep the economy stable
• Automatic stabilisers are cyclical because a change in response to the economic cycle.