The scope of Fiscal policy is wide and involves several government functions all of which are aimed at ensuring spending is contained and restricted to those areas cum sectors where they have the greatest and positive effect on the economy. (Creel et al pp.8) The main entities for the fiscal policy are government revenues, government expenditures and debt management. Fiscal policy is usually as a result of a well thought process mainly involving the best economic minds that a country may have who are organized as Public Service Program or Capital Improvements Program.
This paper will examine the various aspects of Fiscal Policy and its use by the government to achieve its various economic milestones. (Weil pp.1) Besides these, we will look at the main proponents of the Fiscal policy and the main reasons that fail the working of the policy.
At the end of this essay, the reader should be able to understand fully the workings of the Fiscal policy and its various aspects. In the end, one maybe able to give an indication of why Fiscal policy may not work as intended.
It is important though to note that though the impact of economic changes are felt by certain groups in the economy such as family units especially when the government offers tax cuts, the disposable income of this family increases. (Mont pp.75) The fiscal policy is not aimed at an examination of such mild changes or impacts but is focused on the effects of changes in the government budget as a whole.
Fiscal policy is usually looked one sided but a study of it reveals two types of fiscal policies which are not necessarily founded on different bases but are as a result of budget movement. These budget movements on the other hand are determined by the finances available to the government for the purpose of meeting its budgetary requirements. (Creel et al pp.32). These are either budget deficits or budgetary surplus