"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 economy, particularly in response to economic cycles.
Government Budgeting: This is the process by which governments plan and allocate resources, and it involves making decisions about how much money should be spent on various programs, projects, and services.
Taxes: Taxes are a primary means by which governments generate revenue, and they are used to fund various public services and goods. Taxes can be classified into direct and indirect taxes.
Public Expenditure: This refers to the money a government spends on various projects and programs, such as infrastructure, education, healthcare, and defense.
Public Debt: This is the amount of money that a government borrows to finance its expenditures, and it is typically used as an indicator of a government's financial health.
Deficit Spending: Deficit spending occurs when a government spends more money than it generates in revenue, resulting in a budget deficit. It can be used as a tool to stimulate economic growth.
Multiplier Effect: This is the effect of government spending on the economy, in which an initial injection of spending leads to a greater increase in overall economic activity.
Fiscal Policy Tools: Fiscal policy tools refer to the various measures that a government can use to influence the economy, such as taxation, government spending, and borrowing.
Automatic stabilizers: Automatic stabilizers are economic policies that kick in automatically to stabilize the economy during a recession or economic downturn.
Crowding Out: Crowding out occurs when increased government spending leads to a decrease in private investment, as economic resources shift away from the private sector.
Fiscal Sustainability: Fiscal sustainability refers to a government's ability to maintain its long-term financial health, and it involves balancing spending and revenue to prevent excessive debt or deficits.
Fiscal Space: Fiscal space refers to the amount of resources available to government that can be spent without compromising fiscal sustainability.
Public-private partnerships: These are collaborations between government and private entities, where both sides contribute resources to achieve a common goal.
Intergovernmental Fiscal Relations: This involves the distribution of resources and decision-making power between the central government and state/local governments.
Tax Reforms: Tax reforms are changes made to a tax system to improve its efficiency, equity, and revenue generation.
Fiscal Rules: Fiscal rules are guidelines or constraints that governments may implement to ensure fiscal sustainability, such as limits on borrowing, deficits, or spending.
Expansionary Fiscal Policy: A government policy that increases government spending, decreases taxes or both to stimulate economic growth.
Contractionary Fiscal Policy: A government policy that decreases government spending, increases taxes or both to decrease inflation and slow down economic growth.
Automatic Stabilizers: The policies that automatically adjust to an economic downturn or upswing, without any action from policymakers. Examples include unemployment insurance, corporate revenue taxes, and progressive income taxes.
Pro-cyclical Fiscal Policy: A government policy that reinforces the direction and stability of the business cycle by increasing spending during economic upswings and decreasing it during downturns.
Counter-cyclical Fiscal Policy: A government policy that works against the direction of the business cycle to stabilize economic cycles by decreasing government spending during upswings and increasing it during downturns.
Discretionary Fiscal Policy: A government policy that is managed by policymakers, including changes in government spending and taxation.
Fiscal Rules: The rules that set limits on government policy actions, including those on budgets, debts, and deficits on a long-term basis.
Balanced Budget: A government expenditure policy that aims at balancing revenue and expenditure and reducing the public debt to a non-threatening level.
Unbalanced Budget: A public finance policy which has no balance between expenditures and incomes, resulting in deficits or surpluses.
Fiscal conservatism: A political and economic philosophy that advocates lower taxes, less government spending, and reduced regulations.
"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."