Fiscal Stimulus
Definition
Fiscal stimulus refers to measures taken by governments through increased spending or tax cuts aimed at boosting economic activity during times of recession or slow growth. It aims to stimulate consumer demand and investment.
Analogy
Imagine your favorite store offering huge discounts on products during tough economic times. This encourages people to spend more money, stimulating the economy and helping businesses recover.
Related terms
Monetary Policy: Actions taken by a central bank to control the money supply and interest rates to influence economic activity.
Aggregate Demand: The total demand for goods and services in an economy at a given price level during a specific period.
Multiplier Effect: The idea that an initial increase in spending or investment can lead to larger overall increases in economic activity.
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