Essay About Fiscal Policy And Government Spending

Understand the Government and Fiscal Policy – Essay – Bei Yu Ng
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Understand the Government and Fiscal Policy
UNDERSTAND THE GOVERNMENT AND FISCAL POLICYKeywords:                Fiscal policy, taxes, government spending, equilibrium level of income, multiplier, budget, recessionary gap, inflationary gap, automatic stabilizers.  Objectives:        Students should be able to understand                4.1        The sources of government revenue                4.2        The sources of government expenditure                4.3        The role played by the government in a country                4.4        Aims of fiscal policy                4.5        The government expenditure multiplier & the tax multiplier4.6        The impact of government spending and taxes on aggregate expenditure and the equilibrium income level 4.7        How fiscal policy works                4.8        Drawbacks of fiscal policyRef. Book:        Economics: 19th Edition by Campbell R. McConnell, Stanley L. Brue& Sean M. Flynn, McGraw-Hill Irwin, 2012 (Compiled by SP Business School), Chapter 17.         Irvin Tucker, Economics For Today’s World, South-Western College Publishing, Fifth Edition 2008, Chapter 19 and Chapter 21.[pic 2]UNDERSTAND THE GOVERNMENT AND FISCAL POLICY [pic 3]1.        IntroductionIn 2-sector economy, equilibrium is attained when:Aggregate output = Aggregate expenditure/demand[pic 4]   Note that equilibrium need not occur only at full employment.        Equilibrium can occur at: less than full employment                               →[pic 5]more than full employment                                →[pic 6]        (3)        full employmentWhat role does the government play in an economy?Private sectors (C & I) make their decisions based on personal interest→Their combined decisions may be insufficient (which may lead tounemployment) or excessive (which may lead to inflation)→C & I cannot be counted upon to spend more when AE is too lowor spend less when AE is too high→Therefore, need the government to step in to stabilizethe economy at or near full employment→How does the government attain the above?→                     The government can either ← or →AE, shifting it towards full employmentOur current focus will be on fiscal policy in this chapter. [pic 7][pic 8]What are the major aims of using fiscal policy?To maintain the economy at or close to full employment.                                                         To ensure a steady growth in real GDP.[pic 9]To ensure low inflation.To maintain a stable exchange rate between the dollar and foreign currencies.To have a balanced current account.[pic 10]To achieve aims (1) to (5) above, the government also uses monetary policy.Sources of government revenueFrom where does the government obtain the revenue to finance its purchases?[pic 11]a.        Main source is derived from taxes. Examples: direct taxes (income tax, property tax) and indirect taxes (GST).  b.        Non-tax revenue – investment income, income from sales of goods & services, repayment of government loans.        Sources of government expenditureWhat are the main areas of government expenditure?Defence and justice, social & community services, economic services & servicing of its public debt.

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“Understand the Government and Fiscal Policy” EssaysForStudent.com. 01 2017. 2017. 01 2017 < "Understand the Government and Fiscal Policy." EssaysForStudent.com. EssaysForStudent.com, 01 2017. Web. 01 2017. < "Understand the Government and Fiscal Policy." EssaysForStudent.com. 01, 2017. Accessed 01, 2017. Essay Preview By: Bei Yu Ng Submitted: January 9, 2017 Essay Length: 8,017 Words / 33 Pages Paper type: Essay Views: 421 Report this essay Tweet Related Essays Fiscal Policy in the Us Fiscal Policy In The U.S. Fiscal Policy in The U.S. "Real plans for real people." This was the coined theme for the Bush campaign back 725 Words  |  3 Pages Fiscal Policy in the United States Fiscal policy is the process the government uses to determine the appropriate level of taxes and spending necessary to deal with recessions, inflation, and unemployment. 985 Words  |  4 Pages Pressure Groups Are Fundamental to Understanding the British Policy Processes LUDO MOYO PRE-ENTRY COURSE NEIL MCGARVEY вЂ?Pressure groups are fundamental to understanding the British policy processes’. Discuss. The way social and institutional change has reshaped 1,037 Words  |  5 Pages Fiscal Policy Simulation Fiscal Policy Simulation Government officials play a vital role when it comes to the economy. Decisions that are made determine economic growth or an economic 826 Words  |  4 Pages Similar Topics Fiscal Policy GovernmentS Economic Policy Get Access to 89,000+ Essays and Term Papers Join 209,000+ Other Students High Quality Essays and Documents Sign up © 2008–2020 EssaysForStudent.comFree Essays, Book Reports, Term Papers and Research Papers Essays Sign up Sign in Contact us Site Map Privacy Policy Terms of Service Facebook Twitter