Fiscal policy refers to a government's spending and tax policies. It aims to stabilize economic growth and avoid booms and busts. Fiscal policy tools include government spending, taxation, and borrowing. Governments use these tools to influence aggregate demand and influence goals like economic growth, inflation, and unemployment. Fiscal policy plays a crucial role in mobilizing resources, boosting employment and development, and stabilizing an economy.

2.  Word fisc means 'state treasury' & refers to policy concerning use
of 'state treasury' to achieve goals.
 Refers to the actions governments take in relation to taxation
and government spending.
Stimulate economic growth in a period of a recession.
Keep inflation low.
Fiscal policy aims to stabilize economic growth, avoiding a boom
and bust economic cycle.

3. Neutral Fiscal Policy
Expansionary Fiscal Policy
Contractionary Fiscal Policy
 Governments restrained on what they spend depending on what
they bring in
Government brings enough taxation to pay expenditures.
Difficult to tell how much tax will be brought in from one year to the
next.

4. The government spends more than it takes in through taxes.
Uses lower taxes & higher spending to ultimately boost
economic growth.
Government collects more in taxes than it spends.
Reduces aggregate demand which seem like a bad thing
 It helps to reduces inflation.

5. Crucial part of the economic framework
Role in elevating the rate of capital formation
Mobilize resources for financing projects
 Boosting employment levels
 Maintain or stabilize the economy’s growth rate
 Encourage economic development
 Raising the standard of living

7. Taxation
Budget
Public Expenditure
Public Debt
 Government or the taxing authority imposes or levies a tax on its
citizens and business entities.
 Powerful instrument of fiscal policy which greatly effect the changes
in disposable income.
 Increase effective demand and reduce the deflationary gap

8. Estimation of revenue and expenses over a specific period of time
 Usually compiled and re-evaluated on a periodic basis
Refers to use the government budget to affect the economy include
taxes
 Expense that government incurs on the maintenance of the
country or for the welfare of the society
 Expenditure on parks, water works, education and health etc are
all examples of public expenditure.

9. Government when it is unable to meet it’s expenditure with
current revenue
Government can borrow from the public by issuing bonds.
 Funds of the government to finance its expenditure.
 Sources of revenue are taxes, fees, fines