Advantages of Expansionary Fiscal Policy

Advantages of Expansionary Fiscal Policy

Advantages of Expansionary fiscal policy include new jobs creation, removal of depression form the economy, social uplift , raise in income level and achievement the desired growth rate.

1.    Create Job opportunities

Expansionary fiscal policy i.e(more spending & reduced tax rate) create a lot of job opportunities. Public expenditure creates a lot of direct job & indirect jobs. Expansionary policy also boosts the private sector by creating a lot of demand. Private firm produces more to meet the increased demand and thus job opportunity is also created in private sector.

2.    Remove Depression

Expansionary policy removes the depression condition from the economy. In 1930 at the time of great depression, the expansionary policy was adopted by the world leading economies to reduce the impact of depression, which changed the depression situation.

3.    Social Benefit

Expansionary policy also brings change in the social life of the people. The life standard or living standard of people improves due to better facilities of health & education. Increase level of income due the expansionary policy also improves life style of people.

4.    High & Distributed Income level

Expansionary policy raise the income level of the people, because income level rise is not limited to a specific area or group, therefore income gap in the society is also reduced.

5.    Growth Rate Improves

Expansionary policy improves the growth rate, which has a vital importance for maintain the employment level.