Rami, Fiona N.
Del Rosario, Moneth
Allera, Ma. Yazmine Glofe
Bautista, John Myers
NATURE OF FISCAL POLICY
Fiscal policy is commonly looked upon as
comprising those variations in
government tax and expenditure
programs which are undertaken with the
express purpose of securing the goals of
macro-economic policy. It is therefore but
one aspect of the system of public finance
and does not include measures which are
undertaken for reasons of allocate
efficiency or which reflect a concern with
the distribution of income.
Since changes in tax and expenditure policies
often imply a change in the size of the
national debt, variations in debt policy are
often included under the general heading of
fiscal policy. Whilst we refer briefly to the
choice between taxation and debt in the
financing of any given expenditure program,
we consider debt management policy — by
which we mean changes in the composition
of a given debt — to be an entirely separate
and distinct policy question and one beyond
the scope of our current concern.
Example :
A government is capable of directly affecting
economic activity in response to fluctuations in
macroeconomic growth. Via taxation and public
spending, a government can control price inflation,
unemployment rates, and interest rate levels.