Fiscal Policy - What Is It?

Fiscal policy to targets the total level of spending, the total composition of spending, or both in an economy allowing  the government to influence the economy using spending and taxation to ensure that the spending and revenue collections happen appropriately and create a healthy economic growth.

There are two types of fiscal policy, the first on being expansionary. This kind of fiscal policy is used to stimulate economic growth through either the increment of spends from the government or though cutting taxes- frees up businesses to hire more workers to pursue business ventures. The second type is contractionary, which its goal is to slow economic growth to stamp inflation. To accomplish that the government increases the taxes and cut on spends.

The two main tools of a fiscal policy are taxation- income, capital gains from investments, property, and sales and government spending-  subsidies, transfer payments including welfare programs, public works projects, and government salaries.

The Fiscal Policy is truly important to our daily lives, how do you think your government should use it?

sources: wallstreermojo, the balance