Government Fiscal Policy for Economic Management

The government can use various tools to manage the economy of a nation, including government spendings, taxes, and transfer of payment. In times of recession, increasing spendings and reducing taxes can be effective in boosting the economy by putting more money in the hands of businesses and consumers, encouraging expansion and consumption. Fiscal policy allows governments to make adjustments according to spending related to taxes, enabling them to demonstrate high revenue from their operations. Additionally, government use different types of taxes to manage the economy of a country.

ECONOMICS AND
GOVERNMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
Tools that are available to government to manage economy......................................................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Government plays very important role to develop economic performance within the
enterprise. In respect to this, major functions consist by government through they can make their
operations within the marketplace. They provide rules and regulations to operate functions in
different places (Beckmann, Endrichs and Schweickert, 2016). In this context, present report
covers tools and techniques which are available for government to manage economic
development.
Tools that are available to government to manage economy
For managing the economy of country, government has various tools which help them to
increase GDP of the nation. In this context, below are the tools can be explains for development
of economy: Government spending: In this context, government has tools that they spend for future
growth of the nation (Corsetti, Meier and Müller, 2012). In respect to this, fiscal policy
tools available which help to increase the GDP of country. As results, they enhance their
investment through spending money in different aspects. In addition to this, government
can influence to their economic conditions through operations of the business. As results,
they can easily maintain their growth with the various business functions (Dao, 2014).
Generally, government spend money to increase their financial position within the nation.
It will helpful to make effective results within the enterprise. Government also make their
transactions with operating various rules and regulations for other organizations. They
can reduce negative impact from the business operations on the economic position. In
this, they can determine productivity and efficiency level of the business high so that
enterprise cannot create negative impact on economy (Martin and Vanberg, 2013). Taxes: Taxes considered fiscal policy tool, in which government make their transactions
regarding business through effective results. Government charge taxes on company
operations. They determine different tax rate for different enterprise. Thus, they can
generate more revenue for economy development. Government make their taxes on

profession and business so that they can enhance their economic growth easily
(Kalyuzhnova, 2016). In this context, includes service tax, goods tax and many more
other taxes which can be generate by government to make effective transactions within
the enterprise. It is the good way for make finance for the public goods. It is mandatory
payment which consist by rules and regulations. Tax revenue is collected by the society
which operate in marketplace. With the help of this tool, government contribute to the
repayment of cumulated public debt which make high profits from the enterprise
(Fishenden and Thompson, 2013). From the tax revenue, business can generate more
income which can be helpful to monitor economic performances. Taxes create major
impact on the public balances. In respect to this, sometimes taxes goes high automatic. It
will create major impact on the public finance as it reduce deficit or producing surplus.
Similarly, intentional increase of the tax rate reduce disposable income of households. In
this, consumption and savings will go down. In the developing countries tax base consist
direct taxes which make by the large informal sector (Shah, Giordano and Mukherji,
2012). Transfer payment: In this context, government make their operations with developing
social security and welfare of public within the enterprise. It will assist to make effective
results from the business operations. In this aspect, government make their economic
effective through spend more for development of country benefits. In respect to this, they
can offer free of cost services for welfare of the country people (Kumar, Boice and
Shepherd, 2013). Thus, they will able to make employment opportunities within the
enterprise. Government make their functions such as food for poor people and serve
products and services which can be full attention to welfare of the people. Competitiveness of exports: Government also make their operations in systematic manner
in which they contribute competitiveness of different exports (Mergel, 2013). In this, they
will able to make high market share with operating their transactions with different
aspects. In these regards, government can easily enhance their country productivity which
make competitive advantages within the business. It also aids in development of current
because one country can easily get foreign currency easily. Export of the goods make
effective results within the enterprise and economic. In this, different levels can be placed

by the business which need to make effective employment within the organization
(Martin and Vanberg, 2013).. Employment level: Employment level make effective results within the organization. In
respect to this, different pattern of employment consist role of the government within the
business performance. Hence, it generates more employment within the organization. In
addition to this, productivity of labour influence to the competitiveness in the
international marketplace (Corsetti, Meier and Müller, 2012). It will demonstrate deficit
and surplus within the country operations. Thus, government can enhance country
purchasing power easily. Along with this, wider measurement of human development
consist literacy rates and health care provision. In this, government make human
development index which determine care provision related with organizational
performance. Measurement of national income: In order to manage the economy, government has
another tool is national income (Dao, 2014). In respect to this, they can demonstrate
various effective measurement through they can maintain economic process. In this
context, government identifying their total national income from the various resources. In
this context, business and profession consist their total income and which is made by the
government measurement. Expenditure approach: According to this tool, government can determine country GDP
up to the market value of all domestic expenditure which made for final goods and
services (Martin and Vanberg, 2013). In this context, they can use consumption,
investment and government expenditure which determine GDP for the country.
Government add all these aspects together which demonstrate to make high GDP of the
nation. I this term government make their effective participation in making high
economic growth in the nation. It will beneficial to demonstrate valuable information
which are related with the growth of the company (Corsetti, Meier and Müller, 2012). In
addition to this, government can easily identify final goods that are made by them for
development of their country transactions. As results, they can easily make effective and
positive economic results. All aspects can be take positive results within the organization
through business will achieve high economic growth.

 Open market operations: This is the most important method that can be used by
government to manage the economy (Kalyuzhnova, 2016). In this aspect, Federal
Reserve purchase and sell treasury securities. This will influence to the amount of banks
which have on hand to make loan for operating functions. In this aspect, government
make their transactions with giving loan to other enterprise through they can support to
economy of the nation. As results, nation drive economic growth. In addition to this,
government make their transactions with developing operations at interest rates (Shah,
Giordano and Mukherji, 2012). In this aspect, banks give credit to parties at very low
interest rates to increase money supply. On the other hand, if economy is growing very
fast or inflation getting so high, Federal reserve sell all treasury securities in the
marketplace. It will assist to make loans for the development of the country. Monetary policy: This policy is frame by Federal reserve which take various actions at
the workplace (Corsetti, Meier and Müller, 2012). In these aspects, decrease and increase
the money supply by the government which consist important role in the economic
management. When rates in the nation goes very high, borrowers need to pay more taxes.
In addition to this, banks get more revenue from their high tax rates. Attractive interest
rates encourage to customers for buying the products and services from businesses.
Hence, they businesses will get more money so that they need to pay more to banks. In
this context, sets of actions will help to make effective economy come out of a recession
(Beckmann, Endrichs and Schweickert, 2016).
 Fiscal policy: Fiscal policy refers as government powers of spendings and taxations. In
respect to this, it can be used to reduce or enhance total supply of money in the economy
of country. When country is in recession, appropriate policy is to increase spendings and
reduce taxes. In this context, some expansion in the actions consist more money in the
business and consumers hands. It will helpful to encourage business to make expansion
and customers have to buy products for competing their needs (Pelizzo and Stapenhurst,
2013). It will assist to make effective transactions within the business through
government can support to economy position. When country is in recession, policy make
by the government for contradictory measurement of economy position. With the help of
fiscal policy, government can easily make their results according to measurement of the
spending related with taxes.

CONCLUSION
From the above report it can be concluded that government can use various tools for
manage economy of the nation. In respect to this, they use government spendings, taxes and
transfer of the payment. In this, with the help of spendings government can make their
achievement high. In this aspect, they will able to demonstrate high revenue from their
operations. Furthermore, government use another tool which is taxes that help to make positive
outcomes within the enterprise. In this context, they can demonstrate different types of taxes
through they can easily manage economy of the country.

REFERENCES
Books and journals
Beckmann, J., Endrichs, M. & Schweickert, R. (2016). Government activity and economic
growth–one size fits All?. International Economics and Economic Policy. 13(3). pp.429-
450.
Corsetti, G., Meier, A. & Müller, G. J., (2012). What determines government spending
multipliers?. Economic Policy. 27(72). pp.521-565.
Dao, M. Q. (2014). Exports, imports, government consumption and economic growth in upper-
middle income countries. Progress in Development Studies. 14(2). pp.197-204.
Fishenden, J. & Thompson, M., (2013). Digital government, open architecture, and innovation:
why public sector IT will never be the same again. Journal of public administration
research and theory. 23(4). pp.977-1004.
Kalyuzhnova, Y., (2016). The Kazakstan Economy: Independence and Transition. Springer.
Kumar, S., Boice, B. C. & Shepherd, M. J., (2013). Risk assessment and operational approaches
to manage risk in global supply chains.Transportation Journal. 52(3). pp.391-411.
Martin, L. W. & Vanberg, G. (2013). Multiparty Government, Fiscal Institutions, and Public
Spending. The Journal of Politics. 75(04). pp.953-967.
Mergel, I., 2013. Social media adoption and resulting tactics in the US federal
government. Government Information Quarterly. 30(2). pp.123-130.
Pelizzo, R. & Stapenhurst, F., (2013). Parliamentary oversight tools: A comparative
analysis (Vol. 45). Routledge.
Shah, T., Giordano, M. & Mukherji, A., (2012). Political economy of the energy-groundwater
nexus in India: exploring issues and assessing policy options. Hydrogeology Journal.
20(5). pp.995-1006.