ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Fiscal policy is another macroeconomic policy tool for adjusting aggregate demand by using either government spending or taxation policy. Expansionary fiscal policy increases the level of aggregate demand, through either increases in government spending or reductions in tax rates.

Detailed explanation-2: -Various schemes include Ayushman Bharat, Prime Minister Awaas Yojana-Gramin, Schemes for Unemployed Women, Atal Pension Yojana, Social security relief to dependents of workers passing away due to COVID-19, Support for Marginalized Individuals for Livelihood and Enterprise, etc.

Detailed explanation-3: -Expansionary fiscal policy tools include increasing government spending, decreasing taxes, or increasing government transfers. Doing any of these things will increase aggregate demand, leading to a higher output, higher employment, and a higher price level.

Detailed explanation-4: -The goal of expansionary fiscal policy is to reduce unemployment. Therefore the tools would be an increase in government spending and/or a decrease in taxes. This would shift the AD curve to the right increasing real GDP and decreasing unemployment, but it may also cause some inflation.

Detailed explanation-5: -Expansionary fiscal policy is most appropriate when an economy is in recession and producing below its potential GDP. Contractionary fiscal policy decreases the level of aggregate demand, either through cuts in government spending or increases in taxes.