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  • The Government Role: Fiscal Policy

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    Fiscal policy aims to achieve full employment, low inflation, sustainable growth, and maintenance of the monetary system through public budgets. The government uses taxes and spending to influence the economy. Public budgets contain expected revenues and outlays, with the goal of balanced budgets where revenues equal expenditures. If expenditures exceed revenues, there is a deficit, and if revenues exceed expenditures, there is a surplus. Higher deficits can lead to higher inflation while lower spending or higher taxes can reduce business activity and prices.

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    Fiscal policy aims to achieve full employment, low inflation, sustainable growth, and maintenance of the monetary system through public budgets. The government uses taxes and spending to influence the economy. Public budgets contain expected revenues and outlays, with the goal of balanced budgets where revenues equal expenditures. If expenditures exceed revenues, there is a deficit, and if revenues exceed expenditures, there is a surplus. Higher deficits can lead to higher inflation while lower spending or higher taxes can reduce business activity and prices.

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    11 views10 pages

    The Government Role: Fiscal Policy

    Uploaded by

    ibarhim
    Fiscal policy aims to achieve full employment, low inflation, sustainable growth, and maintenance of the monetary system through public budgets. The government uses taxes and spending to influence the economy. Public budgets contain expected revenues and outlays, with the goal of balanced budgets where revenues equal expenditures. If expenditures exceed revenues, there is a deficit, and if revenues exceed expenditures, there is a surplus. Higher deficits can lead to higher inflation while lower spending or higher taxes can reduce business activity and prices.

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    of 10

    The Government Role

    Fiscal Policy
    Fiscal Policy

    Goals

    Full Employment Fiscal Policy


    Is the controlling Taxes and the government expenditure
    to alter the condition of the economy
    Inflation in Check

    Public Budget
    Sustainable Growth
    Is a plan of contains the expected revenues by the
    government and assigned outlays

    Maintaining the
    Monetary System
    Fiscal Policy
    Public Budget

    A plan of how much revenues


    will the government collect and
    how to spend it

    Public Budget

    Revenues = Expenditure Decrease in the


    Balanced Budget reserves

    Expenditure > Revenues


    Deficit

    Expenditure < Revenues Increase in the Public


    Surplus Debt
    Fiscal
    Policy
    2022

    Expected Total Debt


    391 Billion Dollars
    Short-term debt out of
    external 8.4%
    B2 Stable Look
    Fiscal Policy
    What in it for me?
    Inflation Rate

    • Higher deficit means


    higher inflation

    • Lower expenditure means


    lower business activity

    • Higher tax means lower


    business activity and less
    money to spend and
    higher prices

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