Fiscal Policy/Government Policy/Public Policy.pptx

The meaning, objectives, types, tools/instruments of fiscal policy are all included in this ppt. This has been prepared to aid students in understanding and help them achieve the best grade possible. Kindly provide your insightful opinions and recommendations. For additional details, get in touch with Dr. T. Aasif Ahmed.

1. Fiscal Policy Dr. T. AASIF AHMED DEPT. OF ECONOMICS MAZHARUL ULOOM COLLEGE AMBUR-635802 TAMIL NADU M. NO: 9944029901 E-MAIL ID: [email protected]

2. Fiscal Policy The word fiscal has been derived from the word ‘ fisk ’ which means public treasury or Govt. funds. The use of government revenue collection and expenditure  to influence a country's economy. It is the means by which the government adjusts its spending levels and tax rates to monitor and influence a nation’s economy.

3. Objectives of Fiscal Policy To mobilize additional resources into socially necessary lines of development To achieve and maintain economic stability To stabilize the price level. To maintain the growth rate of the economy. To maintain equilibrium in the balance of payments. To raise standard of living of the citizens of the country. To reduce extreme inequality in income and wealth To provide the necessary incentives to the private sector for its healthy growth.

4. Tools/Instruments of Fiscal P olicy Public Expenditure Taxation Public Borrowing Other fiscal measures adopted by the government include: Rationing and price control, Regulation of wages and Increase the production of goods and services.

5. Fiscal Deficit Fiscal Deficit refers to the gap between the government’s total expenditure in a given financial year and its total revenue (excluding borrowings) in the same financial year. It is expressed as a percentage of the Gross Domestic Product (GDP) and an indicator of the government’s financial health.

6. Cyclicality of the Fiscal Policy There are two types of cyclical fiscal policies : Counter-Cyclical Fiscal Policy : It refers to the steps taken by the government that go against the direction of the economic or business cycle . Pro-Cyclical Fiscal Policy : It refers to the type of  fiscal policy  wherein the government reinforces the business cycle by being expansionary during good times and contractionary during recessions.