3 Indian & AP Economy and Planning · 3.4.5 Public finance

3.4.5.4 Fiscal policy: deficit financing, crowding out, multipliers and automatic stabilisers

Fiscal policy uses government spending and taxes to move aggregate demand: raise spending or cut taxes in a slump, and do the opposite in a boom.

  • APPSC Group 1
  • Advanced level
  • 6 min read
  • Full course

Key terms

  • fiscal policy
  • expansionary
  • contractionary
  • counter-cyclical
  • automatic stabiliser
  • crowding out
  • Ricardian equivalence
  • balanced budget multiplier
  • deficit financing

What this note covers

  1. Core factsFoundation
  2. ExplainedStandard
  3. DeeperAdvanced
  4. Mains writingMains writing
  5. Common trapsFoundation
  6. Quick revisionFoundation

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