Obtaining full employment:To obtain full employment and economic growth:
The fiscal policy to attain full employment and to sustain stable price in the economy has been developed in the latest past. The uselessness of monetary policy as a means to eliminate unemployment throughout the Great Depression paved the manner for the development of fiscal policy in attaining this objective. For accelerating the rate of growth, allotment of higher proportion of the completely employed resources is required. Those activities raise the productive capacity of the economy. Thus fiscal policy is employed through its tax instrument to encourage investment and discourage consumption therefore production might rise. It is also essential to raise capital formation by decreasing the high income tax on personal income. To raise employment, the state expenditure must be directed towards giving social and economic overheads. The state must undertake local public works of community development including more labor and less capital per head.
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