In economics and political science, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are government taxation and expenditure. Changes in the level and composition of taxation and government spending can affect the following variables in the economy:
- Aggregate demand and the level of economic activity;
- The pattern of resource allocation;
- The distribution of income.
Fiscal policy refers to the use of the government budget to influence economic activity.
Read more about Fiscal Policy: Stances of Fiscal Policy, Economic Effects of Fiscal Policy, Fiscal Straitjacket
Famous quotes containing the word policy:
“We are apt to say that a foreign policy is successful only when the country, or at any rate the governing class, is united behind it. In reality, every line of policy is repudiated by a section, often by an influential section, of the country concerned. A foreign minister who waited until everyone agreed with him would have no foreign policy at all.”
—A.J.P. (Alan John Percivale)