FISCAL POLICY:- Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy

1. MANAGERIAL ECONOMICS
BBA-IB
THIRD SEMESTER
BY:-
MANSI MAHENDRA DEOKAR

2. FISCAL POLICY
Fiscal policy is the means by which a government adjusts its spending levels
and tax rates to monitor and influence a nation's economy

3. TYPES OF FISCAL POLICY
 Expansionary Policies-If the economy is in recession or underperforming, the
government can add fiscal policies to stimulate the economy. Lowering
taxes allows to keep more of their income to spend as they wish. This
spending creates income for those who are selling products or services,
through a process called the multiplier effect, the cycle is repeated again and
again.

4.  Contractionary Policies- The economy overheats when the demand for goods
and services creates inflationary pressure, when high levels of resource use
create bottlenecks in production and when credit availability tightens
because businesses and consumers become maxed out. When this
happens, the government employs contractionary policies to slow the
economy. Raising taxes pulls money out of the economy, slowing down
consumer spending and curtailing business investment

5. Advantages of fiscal Policy
 Unemployment Reduction-When unemployment increases the government
implies expansionary fiscal policy which helps in increasing spending money or
purchases by cutting tax down. This helps in increase in demand of goods and
to meet the growing demand the private sector increases production creating
more employment.
 Economic Growth Increase- the various fiscal measures helps in the
expansion of national economy for example when the govt. reduces tax the
business and individual come forward to invest and increases the economic
growth

6. Disadvantages of fiscal policy
 Conflict of Objectives- When the government uses a mix of expansionary and
contractionary fiscal policy, a conflict of objectives can occurs.
 Inflexibility - Even when the government increase its spending it takes time
for the money to reach peoples pocket. Hence, delays implementation of
fiscal policy

7. Economic policy
 Definition
 The actions taken by a government to influence its economy.
 Types of economic policy actions can include:-
1. setting interest rates
2. regulating the level of government expenditures
3. creating private property rights
4. setting tax rates

8. Goals of economic policy
 The goals of economic policy consist of :-
 Economic growth: Economic growth means that the incomes of all consumers
and firms are increasing over time.
 Full employment: The goal of full employment is that every member of the
labor force who wants to work is able to find work.
 Price stability: The goal of price stability is to prevent increases in the
general price level known as inflation, as well as decreases in the general
price level known as deflation.

9. Objectives Of Economic policy
 The overall objective of the Government’s economic policy is to create as
high a level of welfare as possible by contributing to:-
1. high level of sustainable economic growth and employment.
2. welfare benefiting everyone (through distribution policy)
3. stable, high level of resource utilization (through stabilization policy)

10. Types of economic policy
 Almost every aspect of government has an important economic component. A few
examples of the kinds of economic policies that exist include:
 Macroeconomic stabilization policy, which attempts to keep the money
supply growing at a rate that does not result in excessive inflation, and attempts
to smooth out the business cycle.
 Trade policy, which refers to tariffs, trade agreements and the international
institutions that govern them.
 Policies designed to create economic growth
 Policies related to development economics
 Policies dealing with the redistribution of income, property and/or wealth
 As well as: regulatory policy, anti-trust policy, industrial policy and technology-
based economic development policy

11. Export and import policy
 It contains in the sphere of foreign trade i.e. with respect to import and
export from the country and more especially export promotion in measures,
policies and procedure related there to.

12. Objectives of Exim policy
 To establish the framework for globalization.
 To promote the productivity competiveness of India industry.
 To encourage the attainment of high and internationally accepted standards
of quality .
 To augment export.
 To generate new employment .
 To produce quality consumer products at reasonable prices.

13. Exim policy influences the following
major decision:-
1. Pricing decision
2. Market promotion decision
3. Marketing strategy decision
4. Selection of product
5. Modification of the product

14. Merits of Exim policy
 Means to boost economic growth
 Employment generation
 Towns of export excellence
 Liberal imports
 Income tax concession and exemptions

15. Demerits of Exim
 Burden of export promotions schemes
 Danger of circular trending
 Risk of importing outdated machinery
 Policy fails to take a holistic view of trade

16. Industry policy
 The industrial policy means the procedures, principles, policies rules and
regulations which control the industry undertaking of the country and pattern
of industrialization.
 Government policy to influence which industries expand and which contract,
via subsidies, tax breaks, and other aids for favored industries.

17. Objectives of industrial policy
 Providing opportunities for employment
 Achieving a self sustained economy
 Achieving faster economic growth
 Alleviating poverty
 Updating technology and modernization of industry

18. Impact of industrial policy
 Change in technology
 Product diversity
 Geographical dispersion
 Destabilization of procured environment
 All round competition

19. Capitalistic Economy
It is that system, where means of production are owned by private
individuals, profit is the main motive and there is no interference by the
government in the economic activities of the economy. Hence, it is
known as free market economy.
 Characteristic of capitalistic economy
 Profit motive
 Minimal government interventions
 Competition
 Willingness to change

20. Socialistic Economy
 Socialism is a term applied to an economic system in
which property is held in common and individually, and
relationship are governed by a political hierarchy.
 Common ownership dent mean decision are made
collectively, however. Instead, individual in positions of
authority make decision in the name of the collective
group

21.  Characteristic of socialistic economy
 Public ownership
 Land economy
 Provides equal opportunity
 No competition
 Pricing mechanism

22. Mixed economy
 A mixed economic system is an economic system that features
characteristics of both capitalism and socialism.
 A mixed economic system protects private property and allows a level
of economic freedom in the use of capital, but also allows for
governments to interfere in economic activities in order to achieve
social aims.
 mixed economies are less efficient than pure free markets

23. Thank you