Definition of Fiscal Policy

What does the term "fiscal policy" mean? What is meant by the term "fiscal policy"?

Fiscal policy is the way in which a government will influence the economy through taxation and expenditures.

For instance, a government may choose to cut taxes in order to kickstart an economy.

Or, in another instance, a government may choose to dramatically increase spending (on infrastructure projects, for instance) to help a country through dire economic times. This increase in spending may result in increased deficits.

The ultimate goal is a government is to have an economy that produces manageable inflation, full employment and economic growth. In order to produce these conditions, a government will modify fiscal policy as they see fit. One side may advocate higher spending coupled with higher taxes, while another side may advocate lower spending coupled with lower taxes.

--

Davemanuel.com Articles That Mention Fiscal Policy:

Weak May Jobs Number Likely Puts Fed Hike On Hold

CBO: Unemployment Rate Will "Gradually Decline" to Around 7% By 2015

Millionaire Surtax Coming?

Shocker: "U.S. Fiscal Policy is Unsustainable" According to CBO Director