Answer to Question #279127 in Microeconomics for Navodita Sharma

Question

Discuss the role of fiscal policy in maintaining macro economic stability, rapid economic growth and a large market for insurance?

Answer 1

During an economic slump, fiscal policy can help to maintain aggregate demand and private sector incomes, while also reducing economic activity during periods of robust expansion. The so-called "automatic fiscal stabilizers" play a significant role in fiscal policy stabilization.