Decisions by the President and Congress, usually relating to taxation and government spending, with the goals of full employment, price stability, and economic growth. By changing tax laws, the government can effectively modify the amount of disposable income available to its taxpayers. For example, if taxes were to increase, consumers would have less disposable income and in turn would have less money to spend on goods and services. This difference in disposable income would go to the government instead of going to consumers, who would pass the money onto companies. Or, the government could choose to increase government spending by directly purchasing goods and services from private companies. This would increase the flow of money through the economy and would eventually increase the disposable income available to consumers. Unfortunately, this process takes time, as the money needs to wind its way through the economy, creating a significant lag between the implementation of fiscal policy and its effect on the economy.
Related information about fiscal policy:
- Fiscal policy - Wikipedia, the free encyclopedia
In economics and political science, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.
- What Is Fiscal Policy?
Feb 16, 2009 ... Learn how governments adjust taxes and government spending to moderate the economy.
- Fiscal Policy: The Concise Encyclopedia of Economics | Library of ...
Fiscal policy is said to be tight or contractionary when revenue is higher than spending (i.e., the government budget is in surplus) and loose or expansionary ...
- Economics: Fiscal Policy
Fiscal policy is carried out by the legislative and/or the executive branches of government. The two main instruments of fiscal policy are government ...
- Home Page | Fiscal Policy Institute (FPI)
November 15, 2012. A new report from the Fiscal Policy Institute shows that various income measures all point toward the same conclusions: In recent years, ...
- Monetary Versus Fiscal Policy, Revisited - NYTimes.com
Sep 1, 2012 ... One recurring complaint from commenters on this blog is that they can't figure out where I stand on monetary versus fiscal policy as a response ...
- Managing the Economy – Government Fiscal Policy
Sep 23, 2012 ... Fiscal policy involves the use of government spending, taxation and borrowing to affect the level and growth of aggregate demand, output and ...
- Fiscal Policy: Taking and Giving Away - Back to Basics: Finance - IMF
By Mark Horton and Asmaa El-Ganainy - Governments use spending and taxing powers to promote stable and sustainable growth.