Fiscal Policy

Definition

Fiscal policy refers to the government's use of taxation and spending to influence the economy. It involves decisions on how much money the government should collect in taxes and how much it should spend on public goods and services.

Related terms

Expansionary Fiscal Policy: This term refers to when the government increases spending or decreases taxes to stimulate economic growth.

Contractionary Fiscal Policy: This term refers to when the government reduces spending or increases taxes to slow down an overheating economy.

Budget Deficit: This term refers to a situation where the government spends more money than it collects in revenue, resulting in a shortfall that needs financing.