Fiscal policy, in simple words, are the decisions that the Government makes to increase or decrease tax collections, as well as public spending, in order to maintain economic stability. The economy forms cycles of recessions and expansions. When the economy is in a recession, people's income goes down, consumption goes down and unemployment goes up. To maintain stability, the government cuts taxes to increase citizens' incomes and encourage consumption, while at the same time increasing public spending to create jobs and reduce unemployment. We call this expansionary policy. In an expansionary policy, the government is in deficit. On the contrary, when the economy is expanding or growing, people's incomes increase, consumption also increases and unemployment is reduced. To recover the deficit obtained during the expansionary policy, the Government increases tax collections and reduces public spending. We call this restrictive policy. This is possible during economic growth, since, at this stage of the cycle, investments increase, income and consumption increase, and jobs in the private sector increase. In short, fiscal policy refers to the decisions that the government makes to increase or reduce tax collections and public spending, depending on the state of the economy. The expansionary policy is applied during the recession, to reduce tax collections and increase public spending, leaving the Government with a deficit. The restrictive policy, on the other hand, is applied during the expansion, to increase tax collections and reduce public spending, in order to recover the deficit obtained during the expansionary policy. I hope this video has helped you understand it better. Thank you very much.