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Fiscal Policy by Mind Map: Fiscal Policy
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Fiscal Policy


Fiscal policy can stimulate AD if economy is below max output

Automatic stabilisers

In upturn less people on benefits

In upturn more people in higher tax bands

Problems reagrding AD

Crowding out

Imperfect information

Lag effect

Large defecit leads to individual uncertainty

Supply side

Encourage people to look for work

Rewarding enterprise

Attracting investement from overseas

Flat rate of tax