"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."
This topic covers the different fiscal policy tools that can be used, such as government spending, taxation, transfer payments, and debt management. It also discusses the advantages and limitations of these tools.
Taxation Policy: The policies and laws created by the government in relation to taxation, such as taxation rates, exemptions, and deductions.
Budgetary Policy: The policy and strategy used by the government in allocating resources and prioritizing spending across different sectors and departments.
Public Expenditures: The government's spending on different sectors or programs, such as education, healthcare, infrastructure, and defense.
Debt management: The strategies and techniques used by the government to manage public debt, including borrowing or repaying loans, and issuing bonds.
Revenue mobilization: The measures taken by the government to increase revenue generation, such as through tax collection, tariffs, and customs.
Fiscal stimulus packages: The measures taken by the government to boost economic growth and recover from economic downturns, such as tax incentives, subsidies, and grants.
Fiscal consolidation plans: The policies and programs implemented by the government to reduce public spending and control the budget deficit, such as austerity measures and spending cuts.
Multiplier effects: The impact of government spending or tax policies on the economy, such as the increase or decrease in GDP, employment, and inflation.
Crowding out effects: The impact of government borrowing on private sector investment and economic growth.
Fiscal rules and regulations: The legal frameworks and guidelines that govern fiscal policy, including the balance between debt and deficit, and the allocation of resources across sectors.
Taxation: This tool involves the government's ability to collect taxes from individuals, businesses, and other entities. Taxes can be increased or decreased depending on the economic conditions.
Government Spending: The government can increase or decrease its spending on various infrastructure projects, welfare programs, and defense spending, among others.
Transfer Payments: This policy involves the government transferring funds to certain individuals or groups in the form of welfare payments, unemployment benefits, and other forms of social assistance.
Subsidies: The government can provide subsidies to certain industries, including agriculture or renewable energy, to encourage growth and job creation.
Public Debt Management: The government can manage the amount and interest rate of public debt issued in the markets to raise funding for various projects or to stimulate the economy.
Fiscal Rules: Governments can also put in place rules to restrain or impose limits on various fiscal policies.
Automatic Stabilizers: Various taxes and social welfare programs can be designed to automatically adjust during economic shocks, thereby stabilizing the economy.
Investment Tax Credits: Governments can offer tax credits on certain types of investments to incentivize more private investment.
Public-Private Partnerships: This tool involves the government's collaboration with the private sector to fund and execute infrastructure projects as well as public service delivery.
Fiscal Transparency: Governments can commit to making the fiscal policies and decisions transparent to the public to promote accountability and reduce corruption.
"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."