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Explain what fiscal policy entails.

      

Explain what fiscal policy entails.

  

Answers


Wilfred
Fiscal policy refers to the manipulation of government revenue and expenditure to achieve policy objectives associated with:

1. Moderating resources allocation and adjusting price mechanisms in favor of the satisfaction of
public wants by encouraging socially optimal investments as well as increasing rate of investment;
2. Redistributing wealth and income;
3. Guiding the national economy in terms of growth and stability;
4. Increasing employment opportunities;
5. Counteracting inflation; and Improving the balance of payments.

The usefulness of fiscal policy is often limited by:

a) Structural constraints in the economies; and
b) Observed conflicts of objectives between long term growth and short term stability; social welfare and economic growth; income distribution and growth and personal freedom and social control.


Wilfykil answered the question on February 6, 2019 at 12:39


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