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Fiscal Policy
It refers to the government purchases,
transfer payments, taxes, and borrowing
as they affect macroeconomic variables
such as real GDP, employment, the price
level, and economic growth.
Fiscal Policy Tools
1. Automatic stabilizers are revenue and spending programs in the federal
budget that automatically adjust with the ups and downs of the economy to
stabilize disposable income and, consequently, consumption and real GDP.
E.G. unemployment insurance and welfare; corporate and personal taxes