Question

How is budgetary policy used to promote GDP growth in the economy?

Answer 1

Answer:

Monetary policy: Change the interest rate and affecting the supply of money (e.g. through quantitative easing). To increase spending in the economy and encourage economic growth, the government may lower interest rates and increase the supply of money however this can cause an increase in inflation.

Fiscal policy is a government's decisions regarding spending and taxing. If a government wants to stimulate growth in the economy, it will increase spending for goods and services. This will increase demand for goods and services. ... A decrease in government spending will decrease overall demand in the economy.