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How Fiscal Policy and Its Requirements Homework Upgrade Your Economics Knowledge

by Jul 8, 2017Economics

Students of economics grow up to be wizards in designing and executing various policies contributing to nations’ growth and development. Aspiring economists got to sharpen their skills in the form of preparing assignments, developing projects, conceiving new ideas so on so forth.  Fiscal policy and its requirements homework upgrade your economics knowledge and equip you with the necessary weapons to conceive and design policies for social welfare.

Fiscal policy is adopted by respective states governments to channelize the funding received in the form of taxes. The channelization is targeted to achieve a well-developed economy.  The government adopts a set of policies in accordance with social welfare and zeroes in on purchases of goods and services, distribution of transfer payments and influences the overall economy.

The set of policies termed as fiscal policy has immense impact on the country’s economy. Subsequently, they influence the other economies they deal within terms of trade and commerce.

Implication of fiscal policy and its requirements homework:

Homework assigned on fiscal policies usually takes the form of case studies or preparing projects elucidating a new design of policy based on certain criteria or in-depth studying of significance of fiscal policy. Fiscal policy is required to

  • Mobilize resources
  • Accelerate growth rate
  • Encourage participation in socially optimal investment
  • Pave the way for investment and capital formation and reduce the tendency of saving
  • Generate employment
  • Promote economic stability
  • Keep a check on inflation aspect
  • Generate national income and ensure proper distribution
  • Dole out subsidies in consumption and production
  • Provide incentive to production and manufacturing

Each aspect has unique features with its merits and demerits which fiscal policy and its requirements homework addresses and tries to iron out.

Mobilize resources

  • To start with this happens to be the first and foremost agenda in underdeveloped countries where for greater social benefit they have to mobilize resource in both private and public sectors
  • At the initial stage, per capita income is pitiably low due to low rate of savings.
  • Government imposes forced savings to generate capital formation and paves the way for
  • Public finance, taxation and forced loans increase the marginal propensity to save.
  • Investment always brings with it an accelerated pace of income and growth.
  • Government takes up planned investment in public
  • In some cases, government takes stern steps to induce progressive taxation to curtail consumption spending on imported luxury items.
  • Government puts a ban on manufacture of luxury and semi-luxury goods.
  • All these mobilizing resources are targeted to achieve a equitable

Accelerated growth rate

  • A public-private partnership raises the bar on investment.
  • Investment accelerates economic growth as is evident from all statistical data.
  • Taxation, public borrowing, deficit financing and surpluses of public enterprise used judiciously so as not to affect production, consumption and public wealth.
  • Agriculture and industry growth should be aligned together to avoid any kind of collision or movement of workforce from one sector to another.
  • In an underdeveloped economy investment in basic and capital goods, industries and social overheads form the backbone for a balanced economic growth.

Encourage in participation of socially optimal investment

  • A fiscal policy and its requirements homework encompass a wide range of economic policy with a focus on overall social welfare.
  • Any project is undertaken only when it’s socially viable.
  • Government invests in projects and productive activity that promotes development and avoids waste at any point in time.
  • Fiscal policies aim to invest in economic and social overheads. For example, construction of public roads, skill development, conservation of scarce natural resources, health and soil conservation,
  • Providing good healthcare facilities is a significant part of any fiscal policy.
  • These conglomeration of policies increase productivity and opens up the market to cherish external economies.

Pave way for investment and capital formation

  • Government takes up long-term strategies to induce investment in strategic industries and public utility service.
  • Government encourages participation in investment of new industries, latest state of the art technology.
  • Marginal productivity of private investment and capital formation increases owing to such private-public partnership.
  • Fiscal policy must be designed to ensure achievable social marginal productivity that results in highest marginal productivity to provide a well-deserved boost to economic growth.

Generate employment

  • Exponential population growth calls for a robust fiscal policy to make way for employment.
  • Unemployment is disguised in nature in underdeveloped countries.
  • Public sectors tend to employ more number of labors for a specific production activity than is required in labor intensive economy.
  • Increased capital formation following a robust fiscal policy can generate real employment at a better
  • Stunning rate of growth of an economy must be followed by a robust ethical distribution to achieve a balanced economy.

Promote economic stability

  • As I mentioned earlier, any economy has the capability to affect other economies with whom they are involved in trade and commerce.
  • International cyclical fluctuations can disrupt an economy if latter is involved in exporting primary products and importing manufactured and capital goods.
  • Fiscal policy and its requirements homework develop the inquisitive attitude among students making them look out for designs and policy to combat recession.
  • Deficit financing during recession has a history of bearing fruits.

Keep a check on inflation aspect

  • Heavy boost to investment compels the inflation tab to rise beyond the permissible limits.
  • There exist a gap between demand and supply of real resources.
  • Rise in purchasing power parity, increased demand, in elasticity of supply along with structural bottlenecks put inflationary pressure on economy.
  • Fiscal policy can incorporate and implement several measures to curb purchasing power.
  • Levying expenditure tax, compulsory deposit scheme, public debt, raising capital gains tax, encouraging habit of saving is few among those.

Generate national income and ensure proper distribution

  • Gross inequality in wealth creates a divide through the entire nation, crippling a society leading to political and social instability and susceptible to foreign invasion.
  • Fiscal policy must ensure the widening gap is minimized.
  • It’s the responsibility of a proper fiscal policy in place to bind the society together acting as a cementing force.

Dole out subsidies in consumption and production

  • Governmentruns public distribution system to subsidize the food grains for the poor, rationing policies; price support policy aims at uplifting the productivity of the poor.
  • Poverty alleviation schemes are run by governments in underdeveloped countries to narrow down the gap between rich and poor and make the latter healthy and productive.

Provide incentive to production and manufacturing

  • Increase in productivity is greatly dependent on a fiscal
  • Tax concessions can enhance output.

Fiscal policy and its requirements homework enrich an economics student with an all-encompassing view of the society in light of policy designs aimed at contributing towards national growth and development.