Fiscal policy refers to a government's spending and taxation policies intended to maintain economic stability. It determines the country's economic direction by adjusting revenue and spending levels to influence aggregate demand. The document discusses expansionary and contractionary fiscal policy, providing examples of each. It also outlines Nepal's 2017/18 budget highlights, the role and limitations of fiscal policy in economic development.

2. Tribhuvan University
Presented By: Group B
Umesh K. Chaudhary
Krishna Dev Bhatta
Bharat Bhusal
Shristee Upadhya
Shraswoti Bhandari
Yashoda Pachhai
Sharmila Ghimire
Topic – Fiscal Policy

4. The manipulation of government purchases,
transfer payments, taxes, and borrowing in
order to positively influence the economy

5. Concept
• Fiscal policy refers to a government’s spending and
taxation policies intended to maintain economic
stability, which is indicated by levels of
unemployment, interest rates, prices and economic
growth.
• It determine the country’s economic direction.
• Government use fiscal policy to influence the
economy by adjusting revenue and spending levels.
• It is related to the levels of taxation and government
spending in order to influence the aggregate demand
and the level of economic activity.

6. FISCAL POLICY
Fiscal policy deals with the government changes in taxes and
spending on the public sector
Government raise taxes to provide goods and services, such as
hospitals and schools
Indivuduals and business are taxed
Main types of taxes
-Income Tax
-Profits/ Corporation tax
-Indirect Taxes
-Import duties and tarrifs

7. FISCAL POLICY SNAP

8. Purpose of Fiscal Policy
• To create full or a state of near full employment in an
economy.
• To maintain price stability.
• To accelerate the rate of economic growth.
• To have optimum allocation of resources.
• To have an equitable distribution of income and wealth.
• To maintain economic stability.
• To boost capital formation and growth.
• To encourage investment.

9. 1. Expansionary
2. Contractinary
Types of fiscal policy

10. • The economy is in recession underperforming the
government can undertake expansionary fiscal
policy to stimulate the economy.
• It is used during the recession time when the
unemployment or other low period of the business
cycle.
• Under it, the government spend more money, lower
e tax or both.
1.Expansionary fiscal policy

11. • It is used to slow down the economic growth
such as inflation is growing too rapidly.
• Under it government spending lower and
raise tax .
• It also reduce job growth and money towards
government contractor
2.Contractionary fiscal policy

12. Budget Allocated NPR 12,78,99,48,55,000/-
Current Expenditure NPR 8,03,53,14,54,000/- (62.8%)
Capital Expenditure NPR 3,35,17,59,70,000/-(26.2%)
Budget for Financial Management NRs. 1,40,28,74,31,000/-(11.0%)
Economic Growth Expected 6.9%
Inflation Rate Expected Below 6%
Fiscal Policy Highlights 2017
Posted on: 22 August, 2017
Fiscal Policy Highlights 2017/18

13. Role Of Fiscal Policy In Economic Development
1. To Mobilize Resources:
2. To Accelerate the Rate of Growth
3. To Encourage Socially Optimal Investment
4. Inducement to Investment and Capital Formation:
5. To Provide more Employment Opportunities:
6. Promotion of Economic Stability
7. To Check Inflationary Tendencies
8. National Income and Proper Distribution
9. Subsidies in Consumption and Production:
10. Reallocation of Resources:
11. Incentive to Production:
12. Balanced Growth:
13. Reduction of Inequality:

14. Limitations Of Fiscal Policy
1. Existence of Barter Economy
2. Lack of Elasticity:
3. Inadequate Data:
4. Illiteracy:
5. Lack of co-operation:

15. Conclusion
Fiscal Policy is government taxing and
spending
They are like a brake and accelerator for the
economy
-Gov. borrowing is like NOS!
Despite flaws, fiscal policy is a good tool to
help manage the economy.