IndietroIntroduction to Fiscal Policy definitions
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1/14IndietroSkip to main contentIndietroFiscal Policy
Government decisions on spending and taxes aimed at influencing economic activity and stabilizing the economy. Monetary Policy
Central bank actions involving money supply and interest rates, separate from government spending and taxation. Government Spending
Expenditures by the national government that directly contribute to GDP and can stimulate or restrain economic growth. Taxes
Compulsory payments to the government that reduce disposable income and influence consumption and savings. Disposable Income
Funds remaining after taxes, available for households to spend on consumption or save for future use. Consumption
Household spending on goods and services, a major component of GDP affected by changes in income and taxes. GDP
Total market value of all final goods and services produced within a country, including government spending. Discretionary Fiscal Policy
Proactive government measures, such as new laws, to alter spending or taxes in response to economic conditions. Automatic Stabilizers
Built-in fiscal mechanisms that adjust spending or taxes automatically with the business cycle, without new legislation. Business Cycle
Recurring phases of economic expansion and contraction that influence income, employment, and fiscal responses. Unemployment Insurance
Government payments to jobless individuals, increasing during recessions and decreasing during economic booms. Aggregate Demand
Total demand for goods and services in the economy, influenced by fiscal actions and automatic stabilizers. Recession
Period of economic decline marked by falling GDP, rising unemployment, and increased government support payments. Economic Boom
Phase of rapid economic growth with rising GDP, higher incomes, and reduced government support payments.
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