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- When inflation, appropriate fiscal policy is to create a budget surplus in order to reduce aggregate spending.
- The instruments in contractionary fiscal policies are the increasing of taxes & the reduction of government spending
- If Budget deficit to decrease or its budget surplus to increase. This measure slows down growth.
- This is because increase in taxes and decrease the government expenditure
- The objective of fiscal policy is firstly, Accelerating the rate of rate of economics growth. Secondly, controlling the equitable distribution of income & growth
- The contractionary fiscal policy is adopted to overcome inflationary problems. If we want to archive this efficient economy growth we must control the rate of inflation by using this fiscal policy
- One of function of commercial bank is create & allocate credits.
- Yes Madam, When inflation, taxes will increase. So that, taxes of borrowing costs will increase, causing profits to decrease. Than people spend less money on the economy
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