How does fiscal policy play a role in deficit building?

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Expert Solution

Fiscal policy refers to the use of government spending and taxes to affect the economy. The policy is expansionary fiscal policy when government spends more on budget to boost the economy and productivity. The policy is contractionary when the government spending decreases.

Thus when the expansionary fiscal policy are used, the expenditure increases and hence does the budget deficit. Thus, this leads in deficit building.

Rahul Sunny answered 1 year ago

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