What is the relationship between fiscal policy and summary demand?

The link between fiscal policy and the summary demand is that fiscal policy is a macroeconomic factor used by governments to influence the level of consumer consumption in the economy. This may be due to an identified need for increased consumption or a desire to slow down consumption to cool the overheated market. Examples of how fiscal policy and summary demand are connected can be observed in the use of taxation, government expenditure and other governmental policies, such as exports and import obligations to influence consumer consumption.

The illustration of the relationship between fiscal policy and summary demand is a situation where the government increases or reduces the income tax in order to support capital investments and economics expenditure. For example, the government could offer tax contributions to certain industries as a means of supporting greater activities and investment in these industries. Tax contributions may include involving the factors such as tax reduction, which will also encourageMore foreign investments in the country as a result of a favorable tax regime in this area. This type of tax manipulation is important because it can serve as a basis for multiple investment, increase supply and increase aggregated consumer demand for products.

When the country exports goods, it results in an increase in aggregated demand for goods from this country. This type of demand flows from the outside of the country and is influenced by such factors such as tax and export regulations. If the quota is introduced on the ceiling on the quantity of certain goods that can be exported in that period, this will have a negative impact on the volume of exports and the total summary demand. The Government may encourage exporting goods from the country to reduce its own duties and other trade tax rates that will stimulate the economy by increasing demand for goods from this country. Another way would a governmentIt could try to reduce demand for certain goods, there could be the introduction of a ban on import or export of goods to a specified period of time.

Fiscal policy and summary demand are connected by the government's decision to increase or reduce its expenses. The decision to reduce the payment of unemployment benefits and other social security benefits also affects the summary demand. Any government increase or reducing income taxes affects the total summary demand. For example, the decision to increase income tax will reduce the available one -off income and subsequently reduce demand.