"The use of government revenue expenditures to influence macroeconomic variables developed in reaction to the Great Depression of the 1930s, when the previous laissez-faire approach to economic management became unworkable."
The use of government spending and taxation to influence the level of economic activity.
Government spending: A critical aspect of fiscal policy that refers to the monetary transactions of the government.
Taxation: A concept of fiscal policy that involves the various levies that different levels of government impose on their citizens.
Budget deficit: A situation where the amount of government expenditure surpasses the total revenue generated, leading to increased debt levels.
The national debt: A summation of the total debt owed by a government to its creditors.
Interest rates: The cost of borrowing money in the economy, which is essential in formulating fiscal policy.
Inflation: The general rise in prices of goods and services in an economy, which has an impact on fiscal policy.
Monetary policy: The impact of monetary policy on fiscal policy and its varied tenets.
Exchange rates: The currency exchange rates of a country and how it impact fiscal policy goals.
Political cycles: The critical role that political cycles play in determining the tenets of fiscal policy.
Economic cycles: The impact of the overall economic cycles on fiscal policy and underlying principles.
Economic growth: A crucial aspect of fiscal policy that aims to stimulate and sustain economic growth.
Public debt management: The best approaches to managing the national debt and sustaining fiscal policy objectives.
Fiscal rules: The overall framework for implementing fiscal policy and regulating the government's budget.
Stabilization policies: Fiscal strategies implemented to stabilize the economy during recessionary times and increase employment.
Crowding-in and crowding-out effects: The impact of government spending on private investment and spending.
Automatic stabilizers: Policies designed to soften market downturns.
Income distribution: The impact of fiscal policy and government transfers on the economic distribution of a country.
Welfare economics: How political ideology influences fiscal policy surrounding welfare and government assistance programs.
Political economy: The impact of political processes on fiscal policies and the broader economic impact.
Expansionary Fiscal Policy: This type of fiscal policy stimulates economic growth by either increasing government spending or decreasing taxes. By increasing aggregate demand, the focus is on creating more jobs and boosting consumer spending. This policy is usually implemented during periods of recession or crises.
Contractionary Fiscal Policy: The goal of this type of fiscal policy is to reduce inflation by decreasing government spending and increasing taxes. This policy decreases aggregate demand, which leads to slower economic growth. This policy is typically implemented during periods of economic expansion.
Restrictive Fiscal Policy: This type of fiscal policy aims to limit consumer spending and boost public savings by increasing taxes and reducing spending. It targets decreasing the budget deficit and strengthening the nation's financial position.
Public Works and Infrastructure Spending: This type of fiscal policy focuses on the use of government funds to finance infrastructure projects, such as highways, bridges, and transportation systems. This policy aims to generate jobs and develop the nation's physical infrastructure.
Subsidies: Government subsidies are grants given to specific industries to support and promote growth. For example, subsidies for farmers have been used to strengthen the agricultural industry and increase the domestic food supply.
Investment Tax Credits: This fiscal policy provides tax incentives to businesses that invest in equipment and technology. The objective is to encourage companies to modernize their operations and become more competitive.
Proprietary Trading: The government can purchase and sell assets to move the economy in the desired direction. The objective is to reduce inflation and maintain stability in the financial markets.
"Fiscal policy is based on the theories of the British economist John Maynard Keynes, whose Keynesian economics theorized that government changes in the levels of taxation and government spending influence aggregate demand and the level of economic activity."
"Fiscal and monetary policy are the key strategies used by a country's government and central bank to advance its economic objectives."
"Changes in the level and composition of taxation and government spending can affect macroeconomic variables, including: - Aggregate demand and the level of economic activity - Saving and investment - Income distribution - Allocation of resources."
"Fiscal policy deals with taxation and government spending and is often administered by a government department; while monetary policy deals with the money supply, interest rates and is often administered by a country's central bank."
"It is designed to try to keep GDP growth at 2%–3% and the unemployment rate near the natural unemployment rate of 4%–5%. This implies that fiscal policy is used to stabilize the economy over the course of the business cycle."
"The previous laissez-faire approach to economic management became unworkable during the Great Depression of the 1930s."
"Fiscal policy is used to stabilize the economy over the course of the business cycle."
"Fiscal policy is based on the use of government revenue collection (taxes or tax cuts) and expenditure to influence a country's economy."
"Fiscal policy is based on the theories of the British economist John Maynard Keynes, whose Keynesian economics theorized that government changes in the levels of taxation and government spending influence aggregate demand and the level of economic activity."
"Inflation is considered 'healthy' at the level in the range 2%–3%."
"Fiscal policy is designed to increase employment."
"The unemployment rate near the natural unemployment rate of 4%-5% is targeted by fiscal policy."
"Both fiscal and monetary policies influence a country's economic performance."
"The use of government revenue expenditures to influence macroeconomic variables developed in reaction to the Great Depression of the 1930s."
"The previous laissez-faire approach to economic management became unworkable during the Great Depression of the 1930s."
"Fiscal policy can affect macroeconomic variables, including aggregate demand and the level of economic activity, saving and investment, income distribution, and allocation of resources."
"Government revenue collection (taxes or tax cuts) and expenditure are the primary tools of fiscal policy."
"Fiscal policy is often administered by a government department."
"Fiscal policy deals with taxation and government spending, while monetary policy deals with the money supply and interest rates."