TYPES OF FISCAL POLICY Presented by Surabhi Agrawal
About Myself A Chartered Accountant (CA) and Company Secretary (CS) by Qualification, I love teaching and Public speaking 1. a. Have secued llIndaank4th and:sthinACCndFinalrespectively 3. Have appeared for UPSC Mains 2017 For the courses related to Monetary Policy of India, go to the following link: 4. https://unacademy.com/course/monetary-policy-of-india-upsc-cse/LGLITJFV https://unacademy.com/course/advanced-concepts-of-monetary-policy- simplified/HSN46R3Y
Types of Fiscal policy Expansionary Fiscal policy Contractionary Fiscal policy
Expansionary Fiscal policy - Here the focus is on increasing money flow in the " It can be done either by increasing public spending - It is used when an economy is in a recession, high " The goal is to put more money in the hands of economy or by reducing taxes. unemployment, Deflation, etc. consumers so they spend more and stimulate the economy.
Reduction in tax rates and increase in public expenditure Increased Increased spending power of people Aggregate Demand Increased Growth Increased Employment Increased Output
Contractionary Fiscal Policy Here the focus is on decreasing money flow in the economy It can be done either by decreasing public spending or by increasing taxes. It is used when an economy is in a state of high Inflation. - The goal is to put less money in the hands of consumers so they spend less and prices are brought under control
Increase in tax rates and reduction in Public expenditure Decreased spending power of people Decreased Aggregate demand May lead to reduction in employmentand Growth Reduction in prices
SUMMARY Taxes Spending Contractionary policy (High demand and Inflation) Increase Decrease Decrease Increase Expansionary policy (Low demand and employment)
Rank 358 UPSC 2018, Chartered accountant and company secretary with 4 All India ranks, passionate learner and above all a positive soul.