Fiscal Policy and Supply-Side Policies (AQA A-Level Economics): Flashcards

Govt uses spending & taxation to achieve economic objectives

$G = T$ (spending equals revenue)

$G > T$ (spending exceeds revenue)

$G < T$ (spending less than revenue)

Manages aggregate demand (AD) level in the economy

Increases AD via higher spending or lower taxes

Decreases AD via lower spending or higher taxes

Public spending displaces private spending, limiting AD increase

Increase economy's productive capacity & shift LRAS right

1950s to 1979