What are the impact of changes in government expenditure and taxes with fiscal policy?
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Government spending is a fiscal policy tool because it has the power to raise or lower real GDP. By adjusting government spending, the government can influence economic output.Jan 29, 2013
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Fiscal policy is when the government uses expenditure and taxation to have impact on the economy.
The government can change the levels of spending or taxation with this policy.
Through this policy, the government may spend more money in expenditure than what it collects in the form of taxes.
It is often applied during times of recession to improve economic growth and promote full employment.
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