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Fiscal Policy
The word fisc means state treasury and fiscal policy refers to policy concerning the use of state treasury of the government finances to achieve certain macroeconomic goals. Fiscal policy has however been variously defined by the economists.

Fiscal policy is the government programme of making discretionary changes in the pattern and level of its expenditure taxation and borrowings in order to achieve certain economic goals such as economic growth, employment, income equality, and stabilization of the economy on a growth path. 

A narrow concept of fiscal policy is budgetary policy while budgetary policy refers to current revenue and expenditure of the financial year, fiscal policy refers to budgetary operations including both current and capital receipts and expenditure. The essence of fiscal policy lies, in fact, in the budgetary operation of the government. The two sides of the government budget are receipts and expenditure. The total receipts of the government are constituted of tax and non-tax revenue and borrowings (including deficit financing). These items in the budget represent the budgetary resources of the government. The government expenditure refers to the total expenditure made by the government in the fiscal year. The total government expenditure consist of payments of goods and services, wages and salaries, interest and loan repayments, subsidies, pensions and grants in aid, and so on . Form economic analysis points of view, receipt items give the measure of the flown on moan from the private sector to the government sector. The government expenditure, On the other hand, represents the flow of money from the government to the economic as a whole. The government receipts are inflows and expenditures are outflow.

The scope of fiscal policy


The scope of fiscal policy comprises the fiscal instruments and the target variables. Fiscal instruments are the variables that government can use and maneuver at its own discretion to achieve certain economic goals. Fiscal instruments include taxation (direct and indirect). Government expenditure, transfer payments (grants and subsidies) and public investment. The target variables are the macro variables including disposable income, aggregate consumption expenditure, savings and investment, imports and exports, and the level and structure of prices.

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