Fiscal Policy

The deliberate manipulation of the national budget to achieve desired social and economic aims is called fiscal policy.

Aims and Effects of Fiscal Policy

a) Maintain Stability

Recession or depression   Deficit budget (Expansionary Fiscal Policy)

By lowering tax rates or increasing government expenditure or both would lead to an increase in purchasing power and aggregate demand.

Inflation   Budget surplus (Contractionary Fiscal Policy)

By increasing taxes or reducing its expenditure would lead to a lowering of incomes and hence a fall in aggregate demand and prices levels.

b) Attain Equitable Income Distribution

The higher income group could be taxed at a progressive rate and the tax revenue could be used to promote the welfare of the lower income group. E.g. provision of free education, subsidised health care and low-cost housing and social welfare payments.

c) Achieve Balance of Payments Equilibrium

To discourage imports, the government could impose tariffs or tax incentives (e.g. lower corporate tax) could be given to export – oriented industries to encourage exports.

d) Achieve Economic Growth

Government expenditure incurred in improving quality of its factors of production ( e.g. training scheme to upgrade skills of workers ), its infrastructure, its health care facilities or in participating in certain economic activities, could lead to increases in production capacity and its national income.

Limitations of Fiscal Policy

a) Inflexible nature of government spending.

• Projects are normally long-term in nature

b) Major changes in taxation cannot be carried out at regular intervals.

c) Time lag involved between identification of problem and when measures take effect.

Email based fiscal policy assignment help - fiscal policy homework help at TutorsGlobe

Are you searching economics tutor for help with Fiscal Policy questions?  Fiscal Policy topic is not easier to learn without external help?  We at www.tutorsglobe.com offer finest service of economics homework help and economics homework help. Live tutors are available for 24x7 hours helping students in their Fiscal Policy related problems. We provide step by step Fiscal Policy question's answers with 100% plagiarism free content. We prepare quality content and notes for Fiscal Policy topic under economics theory and study material. These are avail for subscribed users and they can get advantages anytime.

Why TutorsGlobe for Fiscal Policy homework help

• Higher degree holder and experienced tutors network
• Punctuality and responsibility of work
• Quality solution with 100% plagiarism free answers
• Time on Delivery
• Privacy of information and details
• Excellence in solving accounting questions in excels and word format.
• Best tutoring assistance 24x7 hours