fiscal policy
Definition
Fiscal policy involves government actions to influence a country's economy through taxation and spending decisions. It is used to achieve macroeconomic goals such as controlling inflation, managing unemployment, and fostering economic growth.
Analogy
Think of fiscal policy as the thermostat in your home. Just as you adjust the thermostat to either heat up or cool down your house based on the external temperature, the government adjusts its spending and taxes to either stimulate or slow down the economy depending on current economic conditions.
Related terms
Government Spending: Money expended by the government to pay for various public services, infrastructure projects, and social welfare programs.
Taxation: The process by which governments finance their expenditure by imposing charges on citizens and corporate entities.
Macroeconomic Goals: Objectives that governments aim to achieve for a stable economy including sustainable growth, low unemployment, and low inflation
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