Fiscal Policy

Fiscal Policy - Fiscal Policy

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Fiscal Policy Fiscal policy  is carried out by the legislative and/or the executive branches of government. The two  main  instruments  of fiscal policy are  government expenditures  and  taxes.  The government  collects taxes in order to finance expenditures on a number of  public goods and services —for  example, highways and national defense.  Budget deficits and surpluses.  When government expenditures  exceed  government tax revenues  in a given year, the government is running a  budget deficit  for that year. The budget deficit, which is  the difference between government expenditures and tax revenues, is financed by government  borrowing; the government issues long-term, interest-bearing bonds and uses the proceeds to  finance the deficit. The total stock of government bonds and interest payments outstanding, from  both the present and the past, is known as the 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/18/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

Ask a homework question - tutors are online