FISCAL POLICY

FISCAL POLICY :
- Refers to Government's policy towards taxation, public debt, public expenditure, appropriation and similar matters having an effect on the private business and economy of the nation as a whole.
- Taxation and public expenditure policies which are at the centre of fiscal policy, are adopted to help dampen the business cycle swings and contribute to the maintenance of growing economy with high employment and price stability.
- Fiscal policy is often used to correct the nation's saving investment imbalance and recessionary trends that cannot be managed by monetary pollicy. fiscal policy directly affects the financial resources and purchasing power in the hands of the public and hence is an important determinant of agregate demand.