Question

Compensatory fiscal policy device for controling cyclical flactuation

Answer 1

Answer:

The main thrust of compensatory fiscal policy thus is that the government should inject extra expenditure to reinstate demand. In effect, the government expenditure was able to compensate for reduced private expenditure. This fiscal policy is called compensatory fiscal policy.

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Answer 2

Answer:

Fiscal policy is therefore the use of government spending, taxation and transfer payments to influence aggregate demand. These are the three tools inside the fiscal policy toolkit...

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