Expansionary Fiscal Policy

Expansionary fiscal policy means that the government will increase government spending and reduce taxation in an attempt to increase the money available within the economy. Expansionary policy is a way of trying to jump start the economy. Generally cutting taxes or spending more and could mean a deficit. Its purpose would be to increase growth and reduce unemployment by increasing the demand for labour. The way the government goes about this is that they will lower the tax rate causing people to buy and spend more which will result in a higher demand for labor and resulting in higher demands for goods since the people are spending more. Though this sounds as a good idea it can also lead to inflation. Contractionary fiscal policy is basically when the government chooses to increase taxation and reduces government spending in an attempt to reduce money in the economy as the result due to inflation.

I think currently in this economy the best option would be contractionary fiscal policy would be most appropriate because the government spending. Its the fixing of inflation though taxation is increased it limits how much the government spends which includes government assistant programs. I am not against government assistant programs but with a large number of people on these programs it can result in over spending and cause the economy to go into debt especially if a higher percentage of people are unemployed and on these programs than they are people working. This may affect my organization because with higher taxation means that pay checks will be less causing many people to spend less and those in my organization to want to work over time without a higher demand for goods and a higher demand for labor it can cause a bit of conflict.