Fiscal policy is a crucial component of a government’s economic toolkit that aims to influence the Responsible for Implementing health and performance of the economy. It involves the use of government spending, taxation, and borrowing to achieve specific economic objectives and address various challenges. Fiscal policy works in tandem with monetary policy to achieve macroeconomic stability and promote sustainable economic growth.
During economic downturns, governments may implement expansionary fiscal policies to increase public works projects, leading to higher employment levels. By reducing unemployment, fiscal policy contributes to greater economic productivity and social stability.
Objectives of Fiscal Policy
Fiscal policy is primarily concerned with achieving the following economic objectives:
Price Stability: Controlling inflation is another key concern of fiscal policy. Through contractionary measures, such as raising taxes and reducing government spending, policymakers can curb excess demand in the economy and prevent prices from Uganda Email List spiraling out of control. Price stability is essential for maintaining the purchasing power of consumers and fostering a stable business environment.
Full Employment: Fiscal policy aims to achieve full employment by using government spending to create jobs and reduce unemployment rates.
Fiscal Policy and Income Distribution
Economic Growth: One of the central goals of fiscal policy is to promote economic growth and development. Governments employ expansionary fiscal measures, such as increasing public spending on infrastructure projects and providing incentives for AGB Directory businesses, to stimulate economic activity and boost aggregate demand. By supporting economic growth, fiscal policy can create more job opportunities and improve the standard of living for citizens.