Question

Why does the government change fiscal policy??

Answer 1

A change in fiscal policy has a multiplier effect on the economy because fiscal policy affects spending, consumption, and investment levels in the economy. ... The overall effect on the economy is the same as when the government seeks to target and improve aggregate demand.

Step-by-step explanation:

Answer 2

Fiscal policy also changes the burden of future taxes. When the government runs an expansionary fiscal policy, it adds to its stock of debt. Because the government will have to pay interest on this debt (or repay it) in future years, expansionary fiscal policy today imposes an additional burden on future taxpayers.

Step-by-step explanation: