"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.
Fiscal Policy Definition: Understanding the basic definition of Fiscal policy, its objectives, and its role in economic stabilization.
Types of Fiscal Policy: Understanding the various types of fiscal policy, including discretionary and automatic or built-in stabilizers, and their effects.
Macroeconomic Objectives of Fiscal Policy: Understanding how Fiscal policy is used to achieve macroeconomic objectives such as economic growth, full employment, and stable prices.
Tools of Fiscal Policy: Understanding the various tools of Fiscal policy, including taxation, government spending, and borrowing.
Government Revenue and Taxation: Understanding the various sources of government revenue, including direct taxes, indirect taxes, and non-tax sources of revenue.
The Effects of Taxation: Understanding the effects of taxation on consumer behavior, producer behavior, and the overall economy.
Government Spending: Understanding the various types of government spending, including transfer payments, subsidies, and public goods and services.
Budget Deficits and Public Debt: Understanding the causes and effects of budget deficits and public debt and their impact on the economy.
Fiscal Policy and Business Cycle: Understanding the role of Fiscal policy in business cycles and how Fiscal policy can be used to stabilize the economy.
Fiscal Policy and Inflation: Understanding the effect of Fiscal policy on inflation and how Fiscal policy can be used to control inflation.
Fiscal Policy and International Trade: Understanding the impact of Fiscal policy on international trade and how Fiscal policy can be used to promote international trade.
Fiscal Policy and Distribution of Income: Understanding the impact of Fiscal policy on income distribution and how Fiscal policy can be used to promote income equality.
Fiscal Policy and the Environment: Understanding the role of Fiscal policy in addressing environmental problems and how Fiscal policy can be used to promote a sustainable environment.
Fiscal Policy in Developing Countries: Understanding the unique challenges and opportunities faced by developing countries when implementing Fiscal policy.
Evaluation of Fiscal Policy: Understanding the criteria for evaluating the effectiveness of Fiscal policy and the challenges of evaluating it in practice.
Expansionary Fiscal Policy: This type of fiscal policy is designed to stimulate economic growth by increasing government spending and/or cutting taxes. The objective is to increase aggregate demand, create jobs, and reduce unemployment during a recession.
Contractionary Fiscal Policy: This type of fiscal policy is designed to slow down the economy by decreasing government spending and/or increasing taxes. The objective is to reduce inflation, cool down the economy, and prevent excessive growth that may trigger an economic bubble.
Automatic Stabilizers: These are government policies or programs that automatically adjust to changes in the economy, without requiring approval or intervention from policymakers. Examples of automatic stabilizers include unemployment insurance, progressive income taxes, and welfare programs, which increase spending during downturns and decrease spending during booms.
Discretionary Fiscal Policy: This type of fiscal policy involves deliberate and targeted government intervention to achieve specific economic goals. Examples of discretionary fiscal policy include infrastructure spending, tax incentives, direct government loans, and subsidies for specific industries.
Supply-Side Fiscal Policy: This type of fiscal policy aims to stimulate production and supply in the economy, rather than demand. Supply-side policies can include tax cuts for businesses or individuals, deregulation, and investment in infrastructure, education, or research and development.
Fiscal Austerity: This type of fiscal policy involves a deliberate policy of reducing government spending and cutting public services in order to reduce budget deficits or public debt. Fiscal austerity is often used as a response to a fiscal crisis or as a condition for receiving external financial aid.
Balanced Budget Policy: This type of fiscal policy seeks to maintain a balanced budget, or a budget in which government spending equals government revenue. The objective is to avoid budget deficits or surpluses in the long run, which can have potential negative economic consequences.
Fiscal Neutral Policy: This is a policy in which the government does not intentionally intervene in the economy through fiscal policy, but rather allows the economy to operate according to market forces. The government only provides necessary public goods and services, such as basic infrastructure, education, and healthcare.
Credit Policy: This type of fiscal policy involves targeted lending and credit policies to stimulate economic development and investment. Credit policies can include government credit guarantees, subsidized loans, and credit facilities for specific industries or activities.
Sectoral Fiscal Policy: This type of fiscal policy involves sector-specific interventions, aimed at promoting growth and development in specific industries or sectors. Examples include specific tax incentives, subsidies, or investment in research and development in particular sectors or industries.
"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."