fiscal policy

Fiscal policy is a policy taken by the government to manage or direct the economy into better shape or desired by varying the revenues and expenditures of the government.

In this policy, the government control the state revenue and expenditure, ie budget.

In the outline, fiscal policy has two aspects:
1. quantitative aspect, which is related to the amount of money that must be withdrawn or spent
2. qualitative aspects, ie the types of tax payments and subsidies.

Fiscal policy is used by governments to influence the level of aggregate demand in the economy, and also may affect the aggregate supply through changes in incentives for companies and individuals.

Fiscal policy objective is to achieve a prosperous economy, by three goals in the government's economic policy, namely:
1. tackle inflation
2. tackle unemployment
3. create economic growth.

Other types of fiscal policy
1. Functional finance budget policy, in this case government spending by looking at direct effects on national income, especially to improve employment opportunities
2. Budget management policy, in this policy, taxation and borrowing is intended to achieve economic stability. In the long run achieved a balanced budget with no deficit
3. Automatic budget stabilization policy, in this policy, government spending is determined by the benefits. The role of this policy can be improved by spending on public works projects.

Examples of fiscal policy
1. preparation of the draft budget
2. national taxation
3. efficiency of budget
4. government subsidies.