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  • What Is Fiscal Policy

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    Faith Vidallon
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    Fiscal policy involves the use of government spending, taxation, and borrowing to affect aggregate demand, output, jobs, and the pattern of spending. It is also used to achieve redistribution of income and wealth through different tax rates and to correct for market failures like pollution. The major functions of fiscal policy are to allocate resources for social goods, distribute income and wealth fairly, and stabilize the economy through employment, price stability, and economic growth while considering trade and balance of payments effects.

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    WHAT IS FISCAL POLICY

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    Fiscal policy involves the use of government spending, taxation, and borrowing to affect aggregate demand, output, jobs, and the pattern of spending. It is also used to achieve redistribution of income and wealth through different tax rates and to correct for market failures like pollution. The major functions of fiscal policy are to allocate resources for social goods, distribute income and wealth fairly, and stabilize the economy through employment, price stability, and economic growth while considering trade and balance of payments effects.

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    © All Rights Reserved
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    5 views1 page

    What Is Fiscal Policy

    Uploaded by

    Faith Vidallon
    Fiscal policy involves the use of government spending, taxation, and borrowing to affect aggregate demand, output, jobs, and the pattern of spending. It is also used to achieve redistribution of income and wealth through different tax rates and to correct for market failures like pollution. The major functions of fiscal policy are to allocate resources for social goods, distribute income and wealth fairly, and stabilize the economy through employment, price stability, and economic growth while considering trade and balance of payments effects.

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    © All Rights Reserved
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    WHAT IS FISCAL POLICY?

     Fiscal Policy involves the use of government spending,taxation and borrowing to affect
    the level and growth of aggregate demand,output and jobs.
     Fiscal policy is also used to change the pattern of spending on goods and services.
     It is also a means by which are distribution of income & wealth can be achieved for
    example by changing tax rates on difference levels of income or wealth.
     It is an instrument of micro economic government intervention to correct for free-
    market failures such as pollution or the sub-optimal provision of public and merit goods.

    WHAT ARE THE FUNCTIONS OF FISCAL POLICY?

    MAJOR FUNCTIONS OF FISCAL POLICY


     The allocation function of budget policy,that is the provision for social goods.
     The distribution function of budget policy is fair & just distribution of income and wealth.
     The stabilization function of budget policy that is maintaining high employment a
    reasonable degree of price stability and an appropriate rate of economic growth with due
    consideration of its effects on trade and the balance of payments.

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