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Fiscal policy actions

What possible fiscal policy actions can be taken with respect to expenses and income to accurate excess demand and deficient demand in economy?

Answer:

Fiscal measures to approved excess demand: Government expenditure on public works, public welfare, and defense and so on must be reduced. The Public expenditure on transfer payments and subsidies must be reduced. Taxes must be raised to lower disposable income with the people. Deficit financing should be limited to check the flow of money. Purchasing power must be mopped up via bigger public borrowings.

Fiscal measures to correct deficient demand: Government expenditure and investment must be raised. Transfer payments and subsidies are raised. Taxes must be reduced to raise disposable income of people. Deficit financing must be raised to increase the flow of money. Public debt must be repaid to improve purchasing power of people.

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