Answer to Question #278155 in Macroeconomics for Nish

Question

Discuss the role of fiscal policy in maintaining macroeconomic stability, rapid economic

growth and a large market for insurance.

Answer 1

The role of fiscal policy. Fiscal policy can promote macroeconomic stability by sustaining aggregate demand and private sector incomes during an economic downturn and by moderating economic activity during periods of strong growth.This helps economic agents to form correct expectations and enhances their confidence.