Distinguish between contractional fiscal policy and expansionary fiscal policy?

Question

Can someone distinguish the two  and give an example where they are economically applied 

Comments

Contractual fiscal policy is when the government reduces its spending on programs but does not stop or reduce the interest payments on the same. Expansional fiscal policy is when the government begins to pay back its debt and also reduces its spending. They are two types of policy.

Answer 1

Contractional fiscal policy involves increasing taxes and decreasing government policy expenditure or both in order to fight inflationary pressures.Its accompanied by contractional monetray policies such as increasing interest rates and decreasing money supply in the money market thus access to money becomes difficult.

Expansionary involves decreasing taxes and increasing government expenditure or both in order to fight recessionary pressures.It is accompanied by expansionary boost monetary policies like reducing interest rate and increasing money supply in the market thus making access to money easier.

Answer 2

Contractionary fiscal policy is a macroeconomic policy that involves decreasing government spending or increasing taxes in order to reduce the size of the budget deficit. This type of policy is used to slow down economic growth and reduce inflation. An example of contractionary fiscal policy is a tax increase, which reduces the amount of money citizens have to spend and slows down the rate of economic growth.

Expansionary fiscal policy is a macroeconomic policy that involves increasing government spending or decreasing taxes in order to stimulate economic growth. This type of policy is used to increase aggregate demand and boost levels of investment. An example of expansionary fiscal policy is a tax cut, which increases the amount of money citizens have to spend, leading to increased consumer spending and economic growth.

Answer 3

Contractionary fiscal policy involves decreasing government spending and increasing taxes to reduce inflation, while expansionary fiscal policy involves increasing government spending and decreasing taxes to boost economic growth.

Answer 4

Contractionary fiscal policy is when the government taxes more than it spends. Expansionary fiscal policy is when the government spends more than it taxes.

Answer 5

An expansionary fiscal policy lowers tax rates or increases spending to increase aggregate demand and fuel economic growth. A contractionary fiscal policy raises rates or cuts spending to prevent or reduce inflation