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Topic 6: Taxes,Budgets, Fiscal Policy - Coggle Diagram
Topic 6: Taxes,Budgets, Fiscal Policy
Impacts and Sustainability
Fiscal Policy helps government steer ship of economic stability, growth and socioeconomic growth
through
government spending
significant portions of national budget alloca ted to infra,healthcare, education, defence, + social welfare
on the flip side of government spending is
taxes
2 fiscal policy types
Expansionary Fiscal Policy
increase government spending and lor reduce taxes to infuse more cash into economy
meant to stimulate demands spur investment + create jobs
excessive Use can result in significant budget deficit
Contractionary Fiscal Policy
when inflation increases, government reduces spending and for raising taxes
goal to reduce demands cool inflation, and maintain economic equilibrium
goal is to diminish budget deficit, not decelerate overheating economy
Fiscal redistribution
away to bridge income inequality and address social disparities
endevours to create a fairer more equitable society
budget cuts and taxation policy changes can exacerbate income disparities
Public Wage Bill
challenge for fiscal consolidation efforts
total expenditure on government wages and benefits
larger size → limits resources, delicate balance required
Fiscal Policy
policy on tax, spending, and borrowing by Gov
Taxes
Direct
Indirect
Progressive
Regressive
Purpose of Government Spending
Government Consumption Spending
daily operations costs
salaries, administrative costs, maintanance
support government functions
Government Capital Spending
capital expenditure
investments by government
Fiscal Austerity and consolidation
Fiscal austerity refers to actions to trim budget deficits
fiscal consolidation reductions In non-interest expenditure
Funding and Financing Debt
Government debt - outsanding fiscal liabilities from public sector
must compare to assets
provides insight to how hov manages fiscal resources
Current expenditure - spend on. goods in a period
Capital expenditure - investments in durable Items
Crowding in and Crowding out
multiplier effect
Rating Agencies and Implications
reflects countries credit worthiness