Fiscal Policy: Government Spending and Tax Policies for Economic Influence

FISCAL
POLICY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Counter fiscal policy:..................................................................................................................3
CONCLUSION................................................................................................................................8

INTRODUCTION
Fiscal policy is about which includes use of government spending & tax policies for
influence economic status, specially about macro economic which includes aggregate demand
for business goods & services, employment, price inflation & economic growth (Catalano,
Forni and Pezzolla, 2020). It shows income & expenses which is related to government.
Government spends for people & collects income by businesses in context to tax. Fiscal policy
includes macroeconomic elements spending & income for government. Counter fiscal policy
which is about process which is taken by government for business cycle. This report is about
fiscal policy which runs by government for macroeconomic element. The government increase
spending & reduces taxes which shows recession & slowdown. This report includes topics which
is counter fiscal policy in context to government. Apart from this it includes topics which is
limitations for counter fiscal policy & implementation policy.
MAIN BODY
Counter fiscal policy:
Fiscal policy which is about government spending & taxes which it receives by
businesses. It is about changing the level of taxation & government spending for influencing
economic growth rate. Economic growth is its GDP (Chugunov and Pasichnyi, 2018). GDP is
known for gross domestic product which shows monetary value for all final goods which is
produce by country for the particular period. It is used for stimulate aggregate demand and for
increased economic growth rate. It includes higher spending, lower tax which will results for
higher loan by government. It is about alteration for government spending & taxation which
helps to achieve desirable macro economic goals. Expansionary fiscal policy, which is used to
change demand and boost the economic growth rate. It includes high spending, lower tax rate
which will result into the higher government borrowing. Expansionary fiscal policy is used for
recession or negative output gap. Deflationary fiscal policy is used for reducing the aggregate
demand & it also reduces inflationary pressure. It includes low government spending & higher
tax rate. It will help the government in reducing the government borrowing. Fiscal stabilisers
shows that how government borrowing varies within the economic cycle. Under recession time
period government receives lower tax and spend more for social welfare benefits etc. These
automatic stabilisers helps in minimising the fluctuations of demand. Discretionary fiscal policy