Difference Between Expansionary And Contractionary Situation

Expansionary fiscal policy means the government is increasing government spending and reducing taxation in an attempt to increase the money available in the economy. Contractionary fiscal policy is when the government increases taxation and reduces government spending in an attempt to reduce money in the economy and as a result inflation.
In an Expansionary situation if the decision is made to increase money supply than the government will purchase securities, lower federal discount rate and lower reserve requirements. Ultimately, all three options affect the interest rates by lowering them. A contractionary situation is the opposite of expansionary. In a situation where the government wants to do a contractionary situation than the government