Financial Crises And Regulation Questions
The role of fiscal policy in mitigating the effects of financial crises is to use government spending and taxation measures to stabilize the economy and restore confidence. During a financial crisis, fiscal policy can be used to stimulate economic activity, support businesses and households, and prevent a further decline in economic output. This can be done through measures such as increased government spending on infrastructure projects, tax cuts to boost consumer spending, and providing financial assistance to struggling industries. Additionally, fiscal policy can also be used to regulate and supervise the financial sector, ensuring that appropriate regulations are in place to prevent future crises and protect the stability of the economy.