Syvum Home Page

Home > Discussions > For all activities

Discussion topic: Contributed Answer/Explanation to Q. 2

Viewing replies        View entire discussion

To go to the homepage of this topic, click here.
Home: justatypo_22Original MessageReply  
Subject: Contributed Answer/Explanation to Q. 34
   Fiscal Policy is the use of budget deficits and surpluses, in order to
   affect the level of aggregate economic activity or to maintain economic
   stability or to promote economic growth and development.

Posted at: Sun Jan 2 15:57:28 2011 (GMT)

Page 1 of 1
From: justatypo_22Reply 1 of 1Reply
Subject: Contributed Answer/Explanation to Q. 34
   Fiscal Policy is the use of budget deficits and surpluses, in order to
   affect the level of aggregate economic activity or to maintain economic
   stability or to promote economic growth and development.
   
   Fiscal Policy is a package of economic measures used by the government
   regarding its public expenditure, public revenue and public debt. It
   consists of measures to control economic fluctuations, which are an
   obstacle  to good economic development.
   
   
   According to Harvey and Johnson, fiscal policy is defined as, 'changes in
   government expenditure which influences the pattern and level of activity.'
   
   
    
   
   
   There are three instruments of Fiscal Policy-
   
   
   1) Taxation
   
   
   2) Public Expenditure 
   
   
   3) Public Debt
   
   
    
   
   
   Inflation can be controlled through the following fiscal measures-
   
   
   1) The government must raise existing rates of taxes and impose new taxtion
   rates, this reduces the purchasing powers of the people, which will
   ulimately lead to fall in overall economic exxpenditure rates. This is to
   be done when infltion is caused by rise in prices, or due to abnormally high
   consumption expenditure.
   
   
   2) The government may be reduced with no change in taxation. This will give
   a rise in surplus budget and and drain out purchasing power of the people.
   However, reduction of government spending and raise in taxation would be
   more effective as it would give a larger surplus budget and also will give a
   quicker relief to the people from inflation.
   
   
   3) The government may also borrow funds to prevent private expenditure from
   increasing. Borrowings from the government may take away excessive
   purchasing power of the people.
   
   
   4) The government may sell goods and services to the public at a greater
   prices than what the commodity or service was before.

Posted at: Sun Jan 2 16:23:04 2011 (GMT)

Page 1 of 1

To post to this forum, you must be signed in as a Syvum member. Please sign in / register as a member.

Contact Info © 1999-2024 Syvum Technologies Inc. Privacy Policy Disclaimer and Copyright