expansion/contraction fiscal policy (1 Viewer)

[felixcthecat]

"In past years, China had been running an expansionary fiscal policy. However, China is likely to give up its pro-active fiscal policy and implement a neutral policy. This is because the country has witnessed an over-investment in fixed assets as well as an increase in inflationary pressures."


i think i got something majorly confused... expansionary fiscal policy means it's a surplus rite? waitwait.. NNOOOO it's a deficit.. am i rite? so if china was expansionary stance, that mean china was in a huge deficit, which means greater ecnomic growth putting inflationary pressures..

omg i can't believe i mixed up expansionary and contractionary.. can someone plz confirm me this plz?

expansionary fiscal stance= budget deficit
contractionary fiscal stance= budget surplus

(infact after typing this i feel almost 100% sure.. but i can't make a mistake in this~ so just to make sure!)

 

[Demandred]

Not necessarily, an increase in spending is usually associated with expansionary fiscal policy, a decrease in spending is usually associated with contractionary fiscal policy.

 

[felixcthecat]

thanks~ problem fixed ^^''