In the US was in an economic recession, what fiscal policy or policies would be the best to get it out of the recession? Also what would be the best monetary policies or policy for the Federal Reserve Bank to use in this same situation?
Fiscal policy refers to nation's policy relating to the government spending, taxing, borrowing and debt management. The main objectives of the fiscal policy are:
1. Mobilization of resources
2. Acceleration of the economic growth
3. To minimize the inequalities of Income and Wealth.
There are three main constituents of the fiscal policy, these are:
1. Taxation policy
2. Public Expenditure policy
3. Public debt policy
All these constituents must work together to make the fiscal policy sound and effective
The main objectives for which taxes are levied is to raise revenue by transferring resources from the public to government and the opposite applies when the government cut the taxes so that some resources are transferred from the government to public. It will depend on the tax system that how much it has impact on the economy. The characteristics of good tax system are:
Equity in distribution of tax burden
1. It should yield a satisfactory amount for the maintenance of a government.
2. It should maximize social benefit that is redistribution of wealth and reducing the inequalities of income.
Therefore in the ...
Fiscal policy is referenced.