Question: Define fiscal policy and explain the objectives, functions, and its limitations. Draw graph and explain the circumstances in which the government might adopt a contractionary

Define fiscal policy and explain the objectives, functions, and its limitations. Draw graph and explain the circumstances in which the government might adopt a contractionary fiscal policy (reduce government expenditure and increase taxes) to keep inflation low, or an expansionary fiscal policy (increase government expenditure and reduce taxes) to influence aggregate demand.

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