1. Neutral fiscal policy is usually undertaken when an economy is in equilibrium. The budget is balanced, meaning the government is taking in as much revenue as it is spending.
<span>2. Expansionary fiscal policy involves government spending exceeding tax revenue, and is usually undertaken during recessions. </span> <span>3. Contractionary fiscal policy occurs when government spending is lower than tax revenue, and is usually undertaken to pay down government debt. </span>
