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Fiscal Policy

Fiscal Policy Stances

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Christian Bien

Learning Objectives

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Expansionary
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The government is running a deficit budget or a lower surplus budget to encourage aggregate demand and hence economic growth. Notable Expansionary Budgets: 

  • GFC Budget: Deficit of $54.5 billion (2009/10) - -4.2% of GDP

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Neutral
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The government's budget is balanced. Revenue equals expenditure and has no effect on economic growth.

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Contractionary
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The government is running a surplus budget or a lower deficit budget to discourage the level of aggregate demand and hence, economic growth.

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Expansionary The government is running a deficit budget or a lower surplus budget to encourage aggregate demand and hence economic growth. Notable Expansionary Budgets:

  • GFC Budget: Deficit of $54.5 billion (2009/10) - -4.2% of GDP

Neutral The government's budget is balanced. Revenue equals expenditure and has no effect on economic growth.

Contractionary The government is running a surplus budget or a lower deficit budget to discourage the level of aggregate demand and hence, economic growth.

Concept of Fiscal Policy
Government Revenue and Expenditure Sources
Budget Outcomes
Reasons for Actual Budget Outcomes
Methods for Financing a Budget Deficit
Automatic and Discretionary Stabilisers
Fiscal Policy Stances
Strengths and Weaknesses of Fiscal Policy
Contemporary Fiscal Policy
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