Fiscal policy is really important because it helps shape how much stuff people want to buy and sell. This happens through two main ways: government spending and taxes. Let’s break it down:
Government Spending: When the government spends more money on things like roads, schools, or hospitals, it helps boost demand. For example, if the government builds new roads, it creates jobs. Those workers then spend money on things they need, which helps local businesses.
Taxation: If the government lowers taxes, people and businesses have more money to use. For instance, when income tax goes down, families have extra cash to spend. This makes them buy more, which increases the total demand for goods and services.
In short, good fiscal policy can help the economy grow and stay steady, especially when things are tough.
Fiscal policy is really important because it helps shape how much stuff people want to buy and sell. This happens through two main ways: government spending and taxes. Let’s break it down:
Government Spending: When the government spends more money on things like roads, schools, or hospitals, it helps boost demand. For example, if the government builds new roads, it creates jobs. Those workers then spend money on things they need, which helps local businesses.
Taxation: If the government lowers taxes, people and businesses have more money to use. For instance, when income tax goes down, families have extra cash to spend. This makes them buy more, which increases the total demand for goods and services.
In short, good fiscal policy can help the economy grow and stay steady, especially when things are tough.