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Term Paper on Fiscal Policy


Policy Term Paper:

Fiscal policy is the governmental policy, which is called one of the methods of the country’s intervention into economics, and is aimed at the reduction of the fluctuation of business cycles and maintenance of stable economic system in the country. The main tools of fiscal policy are the profit and expenditure of the state and taxing system, transfer payments and governmental order of goods and services. Fiscal policy is the second in importance after the monetary policy activity of the state in economics. Being the tool of the government fiscal policy has a great number of aims.

The core aim of fiscal policy is the stabilization of the economics of the country and the maintenance of the gross domestic product.

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The country has to maintain the macroeconomic balance in order to support the stability in the sphere of economics. With the help of fiscal policy the government helps to use the resources wisely and as a result maintain the macroeconomic balance. Furthermore, fiscal policy helps to keep the prices on their appropriate level and with the help of this method the government solves numerous social problems, like poverty, and provides itself with the support of the people. There are several duties of fiscal policy: if the economics of the country is in crisis and requires improvement and solutions, the government should interfere into the economics and make everything possible to change the situation for the better. On the contrary, if the economic development is very rapid, the government should reduce the tempo in order to make the process more gradual and stable.

Fiscal policy is an important question for the discussion, moreover, there are many opinions concerning its effectiveness. Some economics say that the reasonable intervention into the economics normalizes the situation, but on the other hand artificial interference into the sphere damages the natural economic processes and often dictates its own requirements concerning the type and quantity of production. A successful fiscal policy term paper should explain the question from all sides and describe the most important aspects of the problem. One should touch upon the advantages and disadvantages of fiscal policy and define its role for the normal condition of the state economics.

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