Fiscal policy introduction

Meaning
• Fiscal policy is defined as the policy under
which the government uses the instrument of
taxation, public spending, public borrowing to
achieve various objectives of economic policy
simply but it is the policy of government
spending and taxation to achieve sustainable
growth.
• For example: Tax cuts and increased
government spending, raising tax.
 Introduction
• Fiscal policy involves the use of government
spending taxation and borrowing to influence both
the patten of economic activity and level of growth
of aggregate demand, output & employment.
• It includes any design on the part of the
government to change the price level.
Composition or timing of government expinditure
or to alter the burden, structure, or frequency of
tax payment.
• Fiscal policy is designed to influence the pattern
and level of economic activity in a country.
• Fiscal policy is in the nature of demand side policy.
• An economy which is producing at full
employment level does not required government
action in the form fiscal policy.
• Government budget is one among the most
powerful instruments of economic policy.
• The important tools in budgetary policy could
be broadly classified into public revenue
including taxaction public expinditure,
public debt, and finally deficit financing to
bridge the gap between public receipts and
payments.