Discussion topic: Contributed Answer/Explanation to Q. 2
To go to the homepage of this topic,
click here.
Home: justatypo_22 | Original Message | Reply | 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_22 | Reply 1 of 1 | Reply | | 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.