Page 241 - DECO201_MACRO_ECONOMICS_ENGLISH

Macro Economics Pavitar Parkash Singh, Lovely Professional University

Notes Unit 14: Macro Economic Policies: Fiscal Policy

CONTENTS
Objectives
Introduction

14.1 Objectives of Fiscal Policy
14.2 Instruments of Fiscal Policy
14.2.1 Public Revenue

14.2.2 Public Expenditure
14.2.3 Public Debt
14.3 Transmission of Fiscal Policy
14.3.1 Role of Taxes in Economic Growth
14.3.2 Taxes as In-Built Stabilizers

14.3.3 Budget Deficit and Debt
14.3.4 Government Budgetary Policy
14.3.5 Expenditure of the Central Government

14.3.6 Budgets of State Government
14.4 Effectiveness of Fiscal Policy
14.5 Summary
14.6 Keywords
14.7 Review Questions

14.8 Further Readings

Objectives

After studying this unit, you will be able to:
State the objectives of fiscal policy;

Identify the instruments of fiscal policy;
Discuss the transmission of fiscal policy;
Describe the efficiency issues and role of fiscal policy in economic growth;
Know the limitations of fiscal policy.

Introduction

The sphere of state action is very vast and all pervading. It includes "maintaining public services,
influencing, attitudes, shaping economic institutions, influencing the use of resources, influencing
the distribution of income, controlling the quantity the of money, controlling fluctuations,
ensuring full employment, and influencing the level of investment. It is through fiscal policy
that the government tries to correct inequalities of income and wealth that increases with

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