Fiscal Policy

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Public finance is the science of income and expenditure of the government. It studies how the government raises funds, spends them, and manages debt for public welfare.

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Public finance lies between economics and politics because it deals with government income and expenditure, and government actions are both economic and political in nature.

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Private finance studies the income, expenditure, and debt of an individual or private company. Public finance studies the income, expenditure, and borrowing of the government.

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Fiscal operations are the methods of income, expenditure, and borrowing of public authorities. They are called fiscal operations because they relate to the government treasury, or the fisc.

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Fiscal policy is a policy which is concerned with the effects of public expenditure, taxation and public borrowing on income, output and employment. It is a tool through which the government regulates…

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The main instruments of fiscal policy are public revenue, public expenditure, public debt, and deficit financing.

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Fiscal policy gained special importance because Keynes asserted that an economy does not necessarily ensure full employment of all productive resources. An economy may settle at an underemployment lev…

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When private expenditure is deficient, public expenditure should be increased to ensure full employment. The government can do this through large-scale public works programmes and by encouraging peopl…