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Survey of Economics-Discussion (2)

Survey of Economics-Discussion (2)

Q Most fiscal policy is aimed at moving a targeted variable. Is the appropriate aim of fiscal policy to target GDP or welfare? Consider the points in this post: https://www.economist.com/blogs/freeexchange/2011/03/fiscal_policy_2 (Links to an external site.)Links to an external site.Links to an external site. Links to an external site.PDF available here . How big is the multiplier? Is there any point to government spending? Add your initial thoughts by Friday and follow-up posts by Sunday.

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Fiscal policy is an economic policy using which the government can influence the economy. The main two tools of the fiscal policy are the taxation and the government spending. When the economic growth is high, then the government uses the fiscal policy to reduce the growth by increasing the tax rate and reducing the government spending. On the other hand, in the time of the recession, the government uses the expansionary fiscal policy by reducing the taxation and increasing the government spending. The fiscal policy tries to minimize the impact of the economic crisis to the vulnerable group also it tries to provide the economic support to the low income group (Horton, 2018) (https://www.imf.org/external/pubs/ft/fandd/basics/fiscpol.htm).