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Fiscal Policy and Problem with Budget Deficits
Fiscal policy is when the government manipulates its spending and taxation in order to manage
the level of aggregate demand and therefore the level of economic growth
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Hence the formula AD = C + I + GS (Or just simply G) + (X-M)

Anyway, to put it simply, there may be two problems in the economy
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) which leads to inflation or even worse hyper-inflation
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The solutions?

(1) The solution to this is loosening the fiscal policy
To do this the government would have to, increase its spending (Governement Spending) or

cut its tax
This would lead to and increase in Aggregate Demand and a rightward shift in AD (On the AD
diagram) which would mean more jobs
...
This can be such as schools or
roads, these can help the long time needs of the country such as students who in the long term
are going to be assets to help the growth of the country
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The problem with this is that some countries take it too far and therefore cause problems with
the country's debt
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(2) The solution to this is tightening the fiscal policy

To do this the government would have to, decrease its spending (Governement Spending) or

increase its tax
This would lead to and decrease in Aggregate Demand and a leftward shift in AD (On the AD
diagram) which would mean less jobs
...

Increasing tax will lead to people in the country having less disposable income and therefore the
people will have less disposable income in the country and cannot help boost the country's
economy
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