Expansionary and contractionary policies can be used to encourage or discourage economic growth. Expansionary policies generally lower taxes and give consumers and producers additional money, which encourages spending and growth. This is done when unemployment is high. On the other hand, contractionary policies generally raise taxes, which can give consumers and producers less to spend. This can cause less economic growth, but is necessary when the economy is growing too quickly and inflation is rising.
the difference between expansionary policy and contractionary policy
expansionary policies are used to stimulate the economy and reduce unemployment
<span>contractionary polices are used to reduce economic growth and combat inflation</span><span>
These policies<span> are mainly </span>used<span> to maintain </span>economic<span> activity or boost it during a downturn. </span>Contractionary<span> fiscal </span>policies<span> on the other hand are </span>used<span> to slow down an</span>economy<span> by measures such as increasing </span>taxes<span> and decreasing government spending. One main reason to use this type of </span>policy<span> is to control inflation.</span>
