What fiscal policy measures has the government adopted in the last two years?

- How are these measures expected to affect aggregate demand and supply, and impact the major macroeconomic goals: steady GDP growth, price stability, and full employment?
- Are these expansionary or contractionary measures?
- Do they potentially lead to a higher or lower budget deficit and national debt?

Fiscal policy, utilized by governments to wield economic influence, can be expansionary or contractionary. Expansionary policy increases aggregate demand through increased government spending or tax cuts, and is used when an economy is in recession. Contractionary policy decreases aggregate demand, usually through government spending cuts or tax increases, and is used when an economy is producing above its potential GDP.

Explanation:

Fiscal policy is an economic tool utilized by the government to influence the economy over time. This influence is usually executed through decisions involving government spending and tax rates. The measures of fiscal policy can be categorized into expansionary and contractionary.

Expansionary fiscal policy raises the level of aggregate demand through increases in government spending or reductions in tax rates. This can facilitate increases in consumption, investment spending, and government purchases. Contrarily, contractionary fiscal policy decreases the level of aggregate demand by decreasing consumption, investment, and government spending, usually through cuts in government spending or increases in taxes.

The impact of fiscal policy on macroeconomic goals such as steady GDP growth, price stability, and full employment largely depend on the state of the economy. If the economy is in recession and producing below its potential GDP, then expansionary fiscal policy is utilized. If the economy is producing above its potential GDP, contractionary fiscal policy is appropriate.

Fiscal policy can potentially lead to higher or lower budget deficits and national debts. Expansionary policy, which involves increased government spending and/or decreased taxes, can lead to higher budget deficits and national debt if the increased spending surpasses the increase in taxation revenue. Meanwhile, Contractionary policy, marked by decreased government spending and/or increased taxes, can reduce budget deficits and national debt if the reduction in government spending outweighs the decrease in tax revenue.

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