Fiscal Policy?

Question

What is Fiscal Policy? How is it used and why it is so important?

Answer 1

This may help to put the term in context:

There are, generally, two means by which a government can try to stimulate the local economy -- fiscal policy and monetary policy.

Fiscal policy concerns the government's actual budget. Tax cuts, entitlement programs (e.g. social security and medicare), subsidies, and deficit spending are examples of activities that fall under fiscal policy. Fiscal policy is comparable to a business' management of its revenues and expenses.

Monetary policy, on the other hand, takes advantage of the government's control of the money supply. The crudest use of monetary policy is when the government simply prints more currency to pay its bills -- governments are free to do this, but it is rarely done, since flooding the economy with so much paper money quickly reduces its value to almost nothing. More subtle approaches include governments selling or buying their own currencies on the market, or setting interest rates for certain bank transactions, as a way of indirectly slowing or speeding the economy. The federal reserve system in the US implements most monetary policy.

Fiscal policy is important because it offers the government a more direct way to affect particular aspects of the local economy. Also, over the past few decades monetary policy in most countries has been moved to independent central banks, which are free in theory from political pressures. This trend means that fiscal policy is now the main option available to politicians who wish to stimulate the economy.

Answer 2

Fiscal Policy
All policy by the government involving the collection and spending of revenue; ie "tax and spend" policy.
In particular, fiscal policy refers to efforts by the government to stimulate the economy directly, through spending.

Answer 3

Fiscal policy includes taxation and government spending. How is it used? Well, it's a tool, and can be used in many ways, including inappropriate ones. Why is it important? Well, in an average country out there, broad government taxes and spends more than half of its GDP...

Answer 4

monetary coverage: Is the coverage of the authorities to regulate the monetary device making use of their gross sales and spending. as an example, if the monetary device isn't going nicely and there is a lot less monetary device interest, then the authorities will spend extra to turn on the econmy (in public initiatives, etc) or perhaps the authorities can upward push or decrease the taxes (if authorities decrease taxes people will spend extra because they're going to have a lot funds, and which will turn on monetary device). monetary coverage: Is the device that authorities use to maintain the marketplace so as. Like inflation, prices of interest, the substitute price. The primary device is the quantity of funds.