TeachMeFinance.com - explain Fiscal policy
fiscal policy -- The government's choice of tax and spending programs,
which influences the amount and maturity of government debt as well as
the level, composition, and distribution of national output and income.
Many summary indicators of fiscal policy exist. Some, such as the budget
surplus or deficit, are narrowly budgetary. Others attempt to reflect aspects
of how fiscal policy affects the economy. For example, a decrease in the
standardized-budget surplus (or increase in the standardized-budget
deficit) measures the short-term stimulus of demand that results from
higher spending or lower taxes. The fiscal gap measures whether
current fiscal policy implies a budget that is close enough to balance
to be sustainable over the long term. The fiscal gap represents the amount
by which taxes would have to be raised, or spending cut, to keep the ratio
of debt to GDP from rising forever. Other important measures of fiscal
policy include the ratios of total taxes and total spending to GDP.
Fiscal policy -- The federal government's decisions about the amount of money it spends and collects in taxes to achieve full employment and non-inflationary economy.
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