Introduction to Fiscal Policy: Understanding Expansionary and Contractionary Policies

The video provides an introduction to fiscal policy, explaining its role in managing economic activity through changes in taxes, expenditure, and borrowing. It distinguishes between macro and microeconomic aspects, focusing on managing output gaps and productive capacity. The video covers expansionary and contractionary fiscal policies, illustrating their impact on economic growth and slowdown. It emphasizes the importance of understanding these concepts to effectively analyze fiscal policy's role in economic management.

What are merit goods and how do they relate to fiscal policy?

What does a budget surplus indicate in terms of fiscal policy?

How does contractionary fiscal policy affect economic activity?

Why is it important to distinguish between expansionary and contractionary fiscal policies?