Question

what is an economic stimulus package? how do governments use this package? explain what js contained and how it can affect you and your family

Answer 1

economic stimulus package: It consists of various economic measures that are taken by the government to stimulate the economy or to revive the economy out of crisis or recession.

how do governments use this package: The government, in an economic stimulus package, has following two tools to stimulate the economy:

- Government Spending: It was argued by the Keynes that the government can stimulate the economy through increasing its spending. This would increase the domestic purchasing power and the aggregate demand in the economy.

- Taxes: the next tool is to decrease the tax level. This will boost the consumption and investment in the economy and helps it to come out of recession.

What is contained:

It can have either Expansionary Fiscal Policy (higher spending, lower taxes) or Expansionary Monetary Policy (higher money supply)

How it can affect you and the family:

This package has the potential to increase the individual and family's disposable income. A higher-income will be favorable for the family for its future growth prospects. People will have to pay less taxes for the goods purchased. So, every economic stimulus package has positive implications on every person and every family.