Keyword Analysis & Research: fiscal policy definition for kids

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What is fiscal policy and its objective?

Fiscal policy is used in conjunction with the monetary policies of the Federal Reserve (the Fed), which uses the supply of money and interest rates to influence inflation and lending. The objectives of fiscal and monetary policy are to control the expansion and contraction of the economy .

What are the characteristics of a good fiscal policy?

The main features of fiscal policy are as follows: It is a countercyclical It must use automatic stabilizers to adapt expenditure and revenue levels to the ups and downs of the economy. It encourages inclusion of the population. Provides better access to services such as education and health. Promotes the country's growth.

What term does fiscal policy refer to?

What is 'Fiscal Policy'. Fiscal policy refers to the use of government spending and tax policies to influence macroeconomic conditions, including aggregate demand, employment, inflation and economic growth. Next Up. Contractionary Policy. Economic Stimulus. Fiscal Multiplier. Limited Government.

What are the issues with fiscal policy?

Budget Deficit. Expansionary fiscal policy (cutting taxes and increasing G) will cause an increase in the budget deficit which has many adverse effects. A higher budget deficit will require higher taxes in the future and may cause crowding out.

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