Tightening fiscal policy (also called fiscal surplus) is the policy of limiting government spending compared to revenues by:
- government spending without increasing revenues less; or
- does not reduce spending, but increase tax revenues; or
- has reduced spending has increased tax revenues.
Fiscal policy tightening is applied when the economy show signs of rapid growth and lack of sustainability or the economy experiencing high inflation. This may make the budget deficit or surplus less budget than the previous raised
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