4.4.0 FISCAL POLICY

FISCAL POLICY

HOW:

Explain the meaning and purpose of a government budget
Identify the main areas of government spending and the reasons for and effects of spending in these areas
Understand how taxation is used to finance government spending, influence market outcomes and redistribute incomes
Describe the qualities of a good tax
Identify and contrast the main forms of tax; progressive, regressive, proportional, direct and indirect
Analyze the impact of taxation on consumers, producers, government and the macroeconomy
Describe the instruments of fiscal policy (changes in tax and government spending) and their impact on the budget balance or imbalance
Analyse how fiscal policy measures may be used by a government to achieve their macroeconomics aims

WHY: In most developed countries the size of government expenditure as a percentage of total national expenditure (the G component of AD) can be as much as 50% of the economy and is usually at least 30%. It is important to note therefore the importance that government expenditure has on the national economy.

4.3.1 DEFINITION OF THE BUDGET

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4.3.2 REASONS FOR GOVERNMENT SPENDING

4.3.3 REASONS FOR TAXATION

4.3.4 PRINCIPLES OF TAXATION

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U.S. National Debt Clock : Real Time
US National Debt Clock : Real Time U.S. National Debt Clock

NEWS STORIES RELATED TO FISCAL POLICY AND THE CORONA VIRUS:

Will coronavirus mean I have to pay more tax?
Coronavirus has brought large parts of the economy to a standstill, and the government has had to spend billions to support workers, businesses and the NHS. So where is all the money going to come from? It's still very early in the crisis, so it's impossible to tell how big the final bill will be.

US to borrow record $3tn in pandemic spending
The US has said it wants to borrow a record $3tn (£2.4tn) in the second quarter, as coronavirus-related rescue packages blow up the budget. The sum is more than five times the previous quarterly record, set at the height of the 2008 financial crisis. In all of 2019, the country borrowed $1.28tn.

Why You Worked for the Government Until April 19, 2018
Tax Freedom Day ® is the first day each year that Americans work for themselves. In 2019 it arrived on April 16th. Every dollar earned before that pays for federal, state, and municipal government services. It's a way to visualize your tax burden.

Fig. 1: How is the federal budget drawn-up in the USA and why does this often result in government shut downs?

The crisis in care
Over 10 months, a small team from the BBC's Panorama programme documented the realities of how the care system is working in England. Based in Somerset, they followed the stories of people needing care and of the people trying to provide it.

The human face behind mandatary social protection government expenditures in the UK.