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

Important the industry effects, Firm effects are more important the industr...

Firm effects are more important the industry effects. What does this mean? Can you think of situations where this might not be true?

Increase demand for diamonds and in supply of diamonds, Suppose there is a ...

Suppose there is a simultaneous increase in the demand for diamonds and increase in the supply of diamonds. Which of the following will occur as a result of these simultaneous even

Frequency distribution channel, The original data values cannot be determin...

The original data values cannot be determined once they are grouped into a frequency distribution channel?

What is as curve, The AS curve Say that nominal wage in year 1 (at a p...

The AS curve Say that nominal wage in year 1 (at a particular point in time) is equal to 1000. On the horizontal part of response curve, real wage is constant and equal to its

Fixation, what is the basis of fixation

what is the basis of fixation

Changes in money market equilibrium, Changes in Money Market Equilibrium ...

Changes in Money Market Equilibrium A shift in either the supply curve for money or the demand curve for money will alter the equilibrium position in the money market (and the

Increase in demand, Changes in demand-Baby diapers and retirement villagesO...

Changes in demand-Baby diapers and retirement villagesOther things equal, an increase in the number of buyers for a product or service will increase -demand. Baby diapers and retir

IS LM curve, example on the calculation of IS LM Curve?

example on the calculation of IS LM Curve?

Aggregate supply - long run equilibrium:graphical analysis, Long Run Equili...

Long Run Equilibrium:Graphical Analysis In the long run the natural rate of output is the level of output to which the economy will tend to adjust in the long run. This indicat

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