What is the role of fiscal policy?

The role of fiscal policy is to provide the growth and stability of the economy of the nation or region of the world through government intervention in the taxation and adjustment of government expenditure. Fiscal policy has often taken over the central role in the country's economy when an economic decline occurs and the government feels that stabilization is required. Long -term objectives of fiscal policy include a reduction in poverty for nation's citizens and sustainable economic growth. Fiscal policy is controlled by government agencies and departments, while monetary policy is controlled by banks that change interest rates and sell government securities. The role of fiscal policy is to increase or reduce taxation and government expenditure depending on the needs of the economy. When the economy slows down, the government can try to stimulate by increased expenditure and lower taxes, providing citizens an increased amount of money to spend. Increased expenditures from multiple one -off income are returned to the government in taxes collected from sales at local and national level.

In the short term, the role of fiscal policy is to stabilize the fighting economy by increasing expenditure and carrying out temporary tax cuts. A short -term tax reduction often has a minimum impact on the economy, because people who have given a tax reduction often save an increased amount of money. The money saved is used to return to economic difficulties when taxation turns to previous levels. Economic growth is a long -term goal of fiscal policies established by the government at sustainable levels that do not allow the economic growth to an uncontrollably fast or slow level.

Government fiscal policies often include stabilizers that automatically stumble into action by growing or decreasing the alarming level. The economic decline sees more government expenditure for unemployment benefits and health care, while government expenditures are regulated at a small level without legislative intervention. EcoNomica is often stimulated at low levels by reducing taxation to support expenditure.

In the course of history, the role of fiscal policy has changed due to the needs of the country at a specific moment. Before the big depression of 30 years. Worldwide Economic accidents 30. Years have forced government to intervene and establish fiscal policy to ensure stabilization. At the end of the 20th century, government policies returned in most nations by fiscal inspection on the stock market and investment markets, followed by an economic decline in the first decade of 21 ^{St. St.}