logo

ECN 60204 Macroeconomics Assignment

   

Added on  2020-05-11

5 Pages890 Words76 Views
Running head: FISCAL POLICY AND ITS IMPACT ON AGGREGATE DEMAND ANDAGGREGATE SUPPLYFISCAL POLICY AND ITS IMPACT ON AGGREGATE DEMAND AND AGGREGATESUPPLYName of the StudentName of the UniversityAuthor’s Note
ECN 60204 Macroeconomics Assignment_1
1FISCAL POLICY AND ITS IMPACT ON AGGREGATE DEMAND AND AGGREGATESUPPLYIntroductionThis essay highlights on the fiscal policy and its impact on the aggregate demand and aggregatesupply in a particular economy. This topic is analyzed based on the article of UK ‘s budgetdeficit that increases this year amid squeezing living standards of people. Fiscal policy denotesthe use of respective nation’s government budget to influence the economy. This mainly includesgovernment expenditure and levied taxes. Fiscal policy is of two types- expansionary andcontractionary. Expansionary policy increases budget deficit while contractionary policydecreases budget deficit.Fiscal Policy influencing aggregate demand and aggregate supplyThe article highlights that the government expenditure deficit is going to worsen in the presentyear as the figures shows that the slowdown in economy has been starting to take toll on publicfinances of UK. It has been stated by some analyst that the UK government will fail in meetingthe plan of decreasing budget deficit each year. Fiscal policy signifies the use of taxing as well asgovernments spending powers to impact on economic outcome (Arestis 2012). The fiscal policyadopted by the government sometimes includes deficit spending in order to enhance aggregatedemand in the respective nation. The budget deficit refers to the shortfall between expenditure ofgovernment and tax revenue. This deficit is basically funded through sale of government bondsto private sector. Expansionary fiscal policy occurs when expenditure increases or taxes lowerswhile contractionary fiscal policy occurs when government spending decreases or tax rises.However, expansionary fiscal policy increases budget deficit while contractionary policydecreases deficit (Jaramillo and Cottarelli 2012). In this article, it has been stated that deficit inUK government spending is going to reduce in this year, which reflects that UK government has
ECN 60204 Macroeconomics Assignment_2

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Article on US Economy’s Fiscal Policy
|6
|899
|54

Introduction to the Business Environment
|10
|2525
|83

(Doc) The Great Recession in UK
|7
|1003
|133

Introduction to Business Environment
|18
|1288
|100

The Tax Cuts and Jobs Act (TCJA)
|5
|1003
|74

Fiscal and Monetary Policy Impacts on Social Media Sector
|10
|2636
|70