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

Open market policy, describe how open market policy can be used to stimulat...

describe how open market policy can be used to stimulate economic activity in the country

Illustrate biological effects of ochratoxin, Q. Illustrate Biological effec...

Q. Illustrate Biological effects of Ochratoxin? Biological effects: It is associated with the chronic progressive kidney disease in humans known as Balkan endemic nephropathy.

Monetary base and the supply of money, Q. Monetary base and the supply of m...

Q. Monetary base and the supply of money? It isn't possible for central bank to print and distribute money -which would increase their debt without increasing their assets. Rat

Ad curve is the aggregate demand, The AD curve is the aggregate demand ...

The AD curve is the aggregate demand The AD curve is the aggregate demand as a function of P whenthe goods and money market are both in equilibrium

Production, mention and explain four factors that determine the volume of p...

mention and explain four factors that determine the volume of production.

Industrial organization, There are very examples of perfect competition. Ye...

There are very examples of perfect competition. Yet in the study of industrial organization, significant discussion is focused on this type of market. Explain why.

Detetrmine gross investment and government expenditure, The following is th...

The following is the information from the national income accounts for a hypothetical country:  GNP                                                                  Rs. 5000.00

Balance of payments, Balance of Payments   All countries have economic t...

Balance of Payments   All countries have economic transactions with other countries. These consist of import and export of goods and services, official and private gifts and don

National income, difference between gdp at market price and nnp at factor c...

difference between gdp at market price and nnp at factor cost

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