Question

Write a summary of any article related to Fiscal Policy!

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Answer 1

Answer:
Fiscal policy is the implies by which a government alters its investing levels and charge rate to monitor and impact a nation's economy. It is the sibling technique to monetary policy through which a central bank impacts a nation's cash supply. These two policies are utilized in different combinations to coordinate a country's financial objectives. Fiscal and Monetary policy is used by Government to manage both recession and inflation in following ways:

• During recession both macroeconomic indicators follow below mentioned measures to handle it:
  • Fiscal Policy against recession:
    • Central bank uses expansionary monetary policy to increase the money supply in the economy.
    • Central bank also reduces the interest rate and increases number of loans in the economy.
  • Monetary Policy against recession:
    • During recession government decreases tax on individuals which increases expenditure in the economy.
    • Government starts spending directly as well in the form of starting various infrastructure projects, investment schemes which provides employment as well.
• During inflation both macroeconomic indicators follow below mentioned measures to handle it:
  • Fiscal Policy against inflation:
    • Central bank uses Contractionary monetary policy to decrease the money supply in the economy.
    • Central bank also increases the interest rate and decreases number of loans in the economy.
  • Monetary Policy against inflation:
    • During inflation government increases tax on individuals which decreases expenditure in the economy.
    • Government starts decreasing the direct spending as well in the form of holding various infrastructure projects, and other work.

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