Major Objectives of Fiscal Policy As an instrument of macroeconomic policy, the goals of fiscal policy are different in different countries and the same country in different situations. However, the major roles and objectives of fiscal policy are as follows: Optimum allocation of resources Full employment Price stability Equitable distribution of income and wealth Economic …
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What is Fiscal Policy? Fiscal policy refers to a policy that is concerned with the effects of government expenditure, taxation, and public borrowing on output and employment. Fiscal policy is a policy concerning the receipts and expenditures of the government. It belongs to the budgetary policy of the government. It operates through changes in government …
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Objectives of Monetary Policy The objectives of monetary policy may be different at different times and in different economic conditions. In the pre-Keynesian times, the monetary policy was the only macroeconomic policy and the objective was only price stability. But after the 1930s the role of monetary policy was drastically changed. Broadly speaking, the major …
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What is Monetary Policy? Monetary policy is concerned with the monetary system of the country. Monetary policy refers to the policy measures undertaken by the Central Bank to influence the money supply as an investment for achieving the objectives of the general economic policy. Monetary policy helps in the realization of such objectives as the …
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What is Business Cycle? A business cycle or trade cycle is defined as an alternation of periods of good trade i.e. increasing trends of economic variables and periods of bad trade i.e. falling trends of macroeconomic variables. Business conditions never remain unchanged. A business cycle refers to oscillations in aggregate economic activities, particularly in employment, …
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What is Inflation? Inflation refers to a persistent and appreciable rise in the general price level. It is a situation of continuously rising prices of commodities and factors of production resulted from the excess money supply. Different economists defined it in different ways. Some economists like Crowther, Gardner Ackley, Harry Johnson regarded inflation as a …
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Investment Multiplier The concept of the multiplier is a component of the Keynesian theory of employment. It is a business, cycle analysis. The concept of the multiplier as a form of ’employment multiplier’ was first developed by F.A. Kahn in his article “The Relation of Home Investment to Unemployment” in the Economic Journal of June …
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Classical Theory of Employment The classical theory of employment states that there is always full employment in a free capitalist closed economy in the long run. The Classical Theory of Employment was developed by the combined contribution of classical economists, such as Adam Smith, J.S. Mill, A.C. Pigou, Ricardo, etc. The theory is based on …
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What is Unemployment? Unemployment is a complex phenomenon. It is easy to notice but different to define. In ordinary or common sense, the term unemployment denotes a situation when a person is not gainfully employed in productive activity and thereby does not work. It can be both voluntary and involuntary. Voluntary unemployment refers to those …
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Difficulties in Measurement of National Income Estimating national income is quite a complicated task. It is beset with difficulties of various kinds. These difficulties in the measurement of national income can be broadly classified into two categories: (a) conceptual difficulties, and (b) practical difficulties. While conceptual problems are of general nature and appear in almost …
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