1 Fiscal Policy Fiscal policy is the process through which the government allocates the revenues it collects to various uses, and adjusts its tax rates and spending to facilitate the growth of the country’s economy. The use of government revenues and expenditure to influence the performance of the economy began after the Great Depression when the United States government realized that it had to intervene in order to resuscitate the economy. A fiscal policy, when well executed, leads to reduced inflation and higher levels of employment. To yield the best results, fiscal policy is usually combined with monetary policy. The aim of a fiscal policy is to increase the rate of economic growth and ensure that the prices of commodities are stable. Fiscal policy is founded on the principles of Keynesian economics which affirms that governments have a significant role to play in creating a stable economic environment. Failure to implement an effective fiscal policy may affect the economy adversely, and even lead to recession. Buy this excellently written paper or order a fresh one from ace-myhomework.com
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