Principles of Macroeconomics / Unit 14 MAC 1314 short lesson, about 20 seconds
Three Expansionary Channels
Captions available
The idea
Expansionary fiscal policy has three routes. Raise household disposable income through tax cuts or transfers, so consumption rises. Raise after-tax profits through business tax measures, so investment rises. Or raise government purchases directly.
In practice
Grants to state and local governments work through the third route.
Where people slip
Contractionary policy runs all three in reverse.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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