Fiscal Policy, types and objectives

-

Fiscal Policy:-

Fiscal policy means the use of government spending and taxation for stabilization of economic conditions. Fiscal policy is set by the government.


Types of Fiscal Policy:-

1- Expansionary Fiscal Policy

2- Contractionary Fiscal Policy

1- Expansionary Fiscal Policy:-

An Expansionary fiscal policy is used in unemployment and recession condition or deflation condition. Expansionary fiscal policy leads to the government lowering taxes or spending more or do both ( government lowering taxes and spending more) for improving the economy.

2- Contractionary Fiscal Policy:-

An Contractionary fiscal policy is used in inflation condition. Contractionary fiscal policy leads to the government raises taxes or cuts spending or do both (raises taxes and cuts spending) for controlling inflation condition.


Objectives of Fiscal Policy:-

1- To maintain and achieve full employment

2- To stabilise the growth rate of the economy

3- To stabilise the price level

4- To maintain equilibrium in the balance of payment

5- To promote the economic development of underdeveloped countries.

Comments

Post a Comment

Popular posts from this blog

Unemployment : It's types and causes

-
  Unemployment :- It is a situation where a person is able and willing to do work but do not get work at the existing wage rate. Types of Unemployment :- 1- Disguised Unemployment 2- Seasonal Unemployment 3- Open Unemployment 1- Disguised Unemployment :- It refers to a state in which more people are engaged in work than its really need. 2- Seasonal Unemployment :- The Unemployment occurs at certain seasons of the year is known as seasonal unemployment. 3- Open Unemployment :- It refers to that economic phenomenon in which person are able and willing to work at the prevailing wage rate but fail to get work. Causes of Unemployment :- 1- Population Explosion 2- Slow rate of Economic Growth 3- Slow growth of Industries 4- Defective Educational System 5- Lack of Proper Planning.
Read more

Marginal Utility and it's types

-
Marginal Utility:- Marginal utility is the additional utility or satisfaction that a consumer derives by consuming one more unit of a goods or services. Types of Marginal Utility:- There are three main types of marginal utility- 1- Positive Marginal Utility 2- Zero Marginal Utility 3- Negative Marginal Utility 1- Position Marginal Utility:- Position marginal utility is happen when consumer gets additional happiness or joy by consuming one more of an item. E.g.- A man is satisfied after drinking a glass of water but after drinking one more glass of water he gets extra satisfaction. Then, it is positive marginal utility. 2- Zero Marginal Utility:-  Zero Marginal Utility is happen when consumer gets no additional satisfaction by consuming one more of an item. E.g.- A man is approximately satisfied after drinking two glasses of water and after drinking one more glass of water there is no increase in satisfaction. Then, it is zero marginal utility. 3- Negative Marginal Utility:- Negativ...
Read more

Definition of Macroeconomics, Macroeconomic Policy, Targets,Objectives and its Conflicts

-
Macroeconomics :-   Macroeconomics is the branch of economics that studies the behaviour and performance of an economy as a whole. In focuses on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product(GDP) and inflation.    Macroeconomic policy :-   It refers to the instruments by which a government tries to regulate or modify the economic affairs of the country in keeping view with certain objectives. "It attempts to assess the behaviour of the economy as a whole and to seek ways in which its aggregate performance might be improved". ● Policy Targets and Instruments :- •  Targets :- (a)- To achieve full employment at the rate of 3% unemployment. (b)-  To achieve price stability at an annual inflation rate of 5% per annum. (c)- To attain the growth rate of 5% per annum for the economy. ● Objectives of Macroeconomics Policy :- (a)-  Full employment (b)-  Balance of payment (c)-  Price Stability (d)-...
Read more