Fiscal policy and budget, Macroeconomics

Assignment Help:

Fiscal policy is the program of government’s with respect to the amount and composition of (i) expenditure: the purchase of commodities and services, and spending in the form of subsidies, unemployment benefit, interest payments on debt,  pension and other payments, 

(ii) revenues, which is taxes and non-tax fees (such as license fees etc.) 

(iii) public debt: borrowing to cover excess  of  expenditure  over  revenues.  Borrowing can be taken from the three major sources: domestic banks, the general public, and the central bank (e.g. State Bank of India), and foreign creditors.

Budget Deficit, Budget Surplus and Balanced Budget can be understood as follows:

If i>ii: then the government is said to be running the fiscal or budget deficit and so the government should borrow (or raise debt) to cover deficit; if i

Fiscal deficits and debt are often reported as the ratio of GDP. Though, there is no theoretical benchmark for what constitutes the sustainable fiscal deficit or the public debt ratio, the Maastricht criteria (for the countries in the European Union) is a significant practical guide. It stipulates the fiscal deficit to GDP must be less than 3% while public debt to GDP must be less than 60%.


Related Discussions:- Fiscal policy and budget

Calculate average and probability , 1 .Use the concepts of sampling error a...

1 .Use the concepts of sampling error and z- scores to explain the concept of distribution of sample  means. (this is a paragraph answer needed) 2. Describe the distribution

Budget constraint, The consumer's utility function is u(x1,x2) = (x1) (x2)^...

The consumer's utility function is u(x1,x2) = (x1) (x2)^2 (a) Graph his budget constraint for p1 = 3, p2 = 2 and M = 900, and write down the equation for his budget line. (b)

Particular capabilities and resources, The resource based model identifies...

The resource based model identifies four criteria that firms can use to evaluate whether particular resources and capabilities are core competencies and can therefore, provide a ba

Effect of distance on completed, From stock and watson 3rd edition introduc...

From stock and watson 3rd edition introduction to econometrics Using the data set CollegeDistance described, run a regression of years of completed education (ED) on distance to t

Healthcare cost, define the economic principle of opportunity cost explain ...

define the economic principle of opportunity cost explain whether spending 17.9% of gdp is too much or too little to spend on healthcare

How to find nominal gdp in the current year, Consider an economy that produ...

Consider an economy that produces only three types of fruit: apples, oranges & bananas. In the base year the production & price data are as follows: Fruit

What are the potential disadvantages of growth, What are the potential disa...

What are the potential disadvantages of growth? The potential disadvantages of growth are as follows: • Raised pollution, • Depletion of non renewable natural resources

Economic functions of money - a medium of exchange, Economic functions of m...

Economic functions of money - A medium of exchange This is its most important role. Without money we would live in a barter economy where we would have to trade goods and

What are economic growth and the growth rate, What are economic growth and ...

What are economic growth and the growth rate? Economic grow: It rise in a country is real level of national output like measured through Gross Domestic Product (GDP). Wh

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd