ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The policy of states to tax their population
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Supply and Demand Originators
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The federal government’s attempt to stabilize the economy through taxing and spending.
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An outdated means of using tax revenue
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Detailed explanation-1: -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.
Detailed explanation-2: -fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals.
Detailed explanation-3: -As economic growth weakens, or when it is in recession, a government can enact an expansionary fiscal policy-for example, by raising expenditure without an offsetting increase in taxation. Conversely, by reducing expenditure and maintaining tax revenues, a contractionary policy might reduce economic activity.
Detailed explanation-4: -Stabilization policy seeks to keep an economy on an even keel by increasing or decreasing interest rates as needed. Interest rates are raised to discourage borrowing to spend and lowered to boost borrowing to spend.
Detailed explanation-5: -There are two key tools of the fiscal policy: Taxation: Funds in the form of direct and indirect taxes, capital gains from investment, etc, help the government function. Taxes affect the consumer’s income and changes in consumption lead to changes in real gross domestic product (GDP).