Fiscal Policy

Spending:

1. Capital expenditure: adds to capital stock, infrastucture, school
2. Current expenditure: on going, wages,
3. Transfer payments: benefits paid, no good and services produced in return

Income:

1. Income taxes, corporate taxes, indirect taxes, tarrifs
2. profits from public sector businesses, sale during privatisation

Definition: Set of government policies relating to ist excpenditure and taxation rates

Aims

1. Maintaining low stable inflation
2. Low unemployment
3. Stable economic environment
4. Reducing fluctuations in business cycle
5. Equity
6. Balance of trade