2. FISCAL POLICY – is a policy under which government uses it’s expenditure and revenue programs to produce desirable effects and avoid undesirable effects on national income, production and employment. Arthur Smithies Late Economist at Harvard
8. INCOME It refers to the income or receipts from public TAX REVENUE House Tax Entertainment Tax Road Tax Wealth Tax Sales Tax Value Added Tax Personal Income Tax Corporate Tax Service Tax Excise Duties Custom Duties Toll Tax
9. INCOME It refers to the income or receipts from public NON - TAX REVENUE Fees License Fees Price of public goods & services Fines Penalties
10. EXPENDITURE It refers to the expenditure incurred by the government Two major categories: Development expenditure Non development expenditure
14. PUBLIC DEBT Everyone borrows when we spend more money than we have. Expenditure - National income = Deficit Deficit1 + Deficit2 + Deficit3 +......= Public debt This Public debt can be drawn internally or externally.
15. Types of Fiscal Policy policy Non-Discretionary FP (Automatic Stabilizer) Discretionary FP (Deliberate Stabilizer) Expansionary FP For Recession Contractionary FP For Inflation
16. Contractionary Fiscal Policy During Inflation Emergency Reduction in government expanse Increase in Taxes Not using Surplus Fund Retiring Public Debt
17. Expansionary Fiscal Policy During Recession Emergency Increase in Government Expanse By Borrowing By Creating New Money Reduction in Taxes