Fiscal policy as a supply side tool
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... ide bar to get there from anywhere in the Virtual Economy. Fiscal policy can be used in various different ways. It may be used to try to boost the level of economic activity when the economy is flagging a little. In this case it is called reflationary policy Alternatively the economy may be doing a little too well and in need of slowing down. In this case deflationary policy is called for. The final use for fiscal policy is as a tool of supply-side policy The rest of the pages in this section go into more detail on each of these policies. To access them, use the links below, on the right-hand side or at the foot of the page: To help imagine how these policies work think of the economy as a balloon. The air in the balloon is the level of demand or economic activity. If the balloon is a little low and short of air you want to reflate it, but if it is over-expanded and in danger of bursting then you deflate it. The same is true of the eco ...
