Fiscal Policy can be expansionary, neutral, and contractionary:
An Expansionary Fiscal Policy involves an increase in government spending or a decrease in taxation, or both. Such a policy will cause either a larger budget deficit or a smaller budget surplus than the preceding term.
A Neutral Fiscal Policy occurs when the government spending equals the taxation, meaning that the budget will be balanced, and taxation revenue alone will be sufficient to finance government spending.
A Contractionary Fiscal Policy involves a decrease in government spending or an increase in taxation, or both. Such a polic will cause either a smaller budget deficit or a larger budget surplus than the preceding term.