ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In the United States, fiscal policy is directed by both the executive and legislative branches of the government. In the executive branch, the President and the Secretary of the Treasury, often with economic advisers’ counsel, direct fiscal policies.

Detailed explanation-2: -Fiscal policy refers to the tax and spending policies of the federal government. Fiscal policy decisions are determined by the Congress and the Administration; the Fed plays no role in determining fiscal policy.

Detailed explanation-3: -In most modern economies, the government deals with fiscal policy while the central bank is responsible for monetary policy. Fiscal policy is composed of several parts. These include, tax policy, expenditure policy, investment or disinvestment strategies and debt or surplus management.

Detailed explanation-4: -Fiscal policy originated with the theories of John Maynard Keynes, the famous British economist. He puts forth the idea that a government can manage the growth of an economy through tax and spending.

Detailed explanation-5: -Fiscal policy is defined as the policy under which the government uses the instrument of taxation, public spending and public borrowing to achieve various objectives of economic policy. Simply put, it is the policy of government spending and taxation to achieve sustainable growth.