fiscal policy

Examples of fiscal policy in the following topics:

• Arguments For and Against Fighting Recession with Expansionary Fiscal Policy

  • Expansionary fiscal policies, which are usually implemented during recessions, attempt to increase economic demand.
  • Fiscal policy is a broad term, describing the policies enacted around government revenue and expenditure in order to influence the economy.
  • Expansionary fiscal policies involve reducing taxes or increasing government expenditure.
  • Increasing government spending, creating a budget deficit, and financing the shortfall through debt issuance are typical policy actions in an expansionary fiscal policy scenario.
  • Evaluate the pros and cons of fiscal policy intervention during recession

• Fiscal Policy and the Multiplier

  • Fiscal policy can have a multiplier effect on the economy.
  • The size of the multiplier effect depends upon the fiscal policy.
  • Expansionary fiscal policy can lead to an increase in real GDP that is larger than the initial rise in aggregate spending caused by the policy.
  • Conversely, contractionary fiscal policy can lead to a fall in real GDP that is larger than the initial reduction in aggregate spending caused by the policy .
  • Describe the effects of the multiplier beyond its relevance to fiscal policy

• Long-Run Implications of Fiscal Policy

  • Expansionary fiscal policy can lead to decreased private investment, decreased net imports, and increased inflation.
  • Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.
  • That being said, these changes in fiscal policy can affect the following macroeconomic variables in an economy:
  • Economists still debate the effectiveness of fiscal policy to influence the economy, particularly when it comes to using expansionary fiscal policy to stimulate the economy.
  • If a country pursues and expansionary fiscal policy, high inflation becomes a concern.

• Defining Fiscal Policy

  • Fiscal policy is the use of government spending and taxation to influence the economy.
  • Fiscal policy is the use of government spending and taxation to influence the economy.
  • Governments use fiscal policy to influence the level of aggregate demand in the economy in an effort to achieve the economic objectives of price stability, full employment, and economic growth.
  • Neutral: This type of policy is usually undertaken when an economy is in equilibrium.
  • In times of recession, the government uses expansionary fiscal policy to increase the level of economic activity and increase employment.

• Fiscal Policy and Policy Making

  • Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.
  • The two main instruments of fiscal policy are government taxation and expenditure.
  • Neutral fiscal policy, usually undertaken when an economy is in equilibrium.
  • Expansionary fiscal policy, which involves government spending exceeding tax revenue, and is usually undertaken during recessions.
  • Comparison of National Spending Per Citizen for the 20 Largest Economies is an example of various fiscal policies.

• How Fiscal Policy Relates to the AD-AS Model

  • When setting fiscal policy, the government can take an active role in changing its spending or the level of taxation.
  • Expansionary fiscal policy is used to kick-start the economy during a recession.
  • A contractionary fiscal policy is implemented when there is demand-pull inflation.
  • In pursuing contractionary fiscal policy the government can decrease its spending, raise taxes, or pursue a combination of the two.
  • Contractionary fiscal policy shifts the AD curve to the left.

• Fiscal Policy

  • Fiscal policy is the use of government revenue collection or taxation, and expenditure (spending) to influence the economy.
  • Neutral fiscal policy is usually undertaken when an economy is in equilibrium.
  • Expansionary fiscal policy involves government spending exceeding tax revenue, and is usually undertaken during recessions.
  • Contractionary fiscal policy occurs when government spending is lower than tax revenue, and is usually undertaken to pay down government debt.
  • Review the United States' stances of fiscal policy, methods of funding, and policies regarding borrowing

• Expansionary Versus Contractionary Fiscal Policy

  • When the economy is producing less than potential output, expansionary fiscal policy can be used to employ idle resources and boost output.
  • Keynes advocated counter-cyclical fiscal policies (policies that acted against the tide of the business cycle).
  • This is known as expansionary fiscal policy.
  • The effects of fiscal policy can be limited by crowding out.
  • Keynesian economists advocate counter-cyclical fiscal policies.

• Limits of Fiscal Policy

  • Two key limits of fiscal policy are coordination with the nation's monetary policy and differing political viewpoints.
  • While fiscal policy can be a powerful tool for influencing the economy, there are limits in how effective these policies are.
  • Fiscal policy and monetary policy are the two primary tools used by the State to achieve its macroeconomic objectives.
  • How effective fiscal policy is depends on the multiplier.
  • There are two different approaches to fiscal policy in the US.

• Stability Through Fiscal Policy

  • Governments can use fiscal policy as a means of influencing economic variables in pursuit of policy objectives.
  • Governments use fiscal policy to influence the level of aggregate demand in the economy, in an effort to achieve economic objectives of:
  • In the classical view, the expansionary fiscal policy also decreases net exports, which has a mitigating effect on national output and income.
  • This is because, all other things being equal, the bonds issued from a country executing expansionary fiscal policy now offer a higher rate of return.
  • Other possible problems with fiscal stimulus include the time lag between the implementation of the policy and detectable effects in the economy, and inflationary effects driven by increased demand.