Introduction Fiscal Policy is a part of macro economics. Economic Reform Since 1991 class 12 Notes Economics in PDF are available for free download in myCBSEguide mobile app. 12. (b) Indirect Tax (i)  Economic growth Fiscal policy deals with the taxation and expenditure decisions of the government. Plan Expenditure The expenditure to be incurred during the financial year on the development and investment programmes under the current Five Year Plan is termed as plan expenditure. While we strive to provide the most comprehensive notes for as many high school textbooks as possible, there are certainly going to be some that we miss. Fiscal policy involves the use of government spending, direct and indirect taxation and government borrowing to affect the level and growth of aggregate demand in the economy, output and jobs. OPEN ECONOMY MACROECONOMICS 6.1 The Balance of Payments 6.1.1 BoP Surplus and Deficit 6.2 The Foreign Exchange Market 6.2.1 Determination of the Exchange Rate 6.2.2 Flexible Exchange Rates 6.2.3 Fixed Exchange Rates 6.2.4 Managed Floating Shocks or changes from abroad will cause changes in net exports which can shift aggregate demand leftward or rightward. Through monetary policy, the Fed is able to affect output. Current indian govt wants to achieve fiscal deficit target by not reducing expenditure but increasing tax collection. Fiscal Policy refers to a policy of : (a) Money lenders (b) Government Finance (c) Commercial banks (a) Monetary authority. Fiscal policy choices: Expansionary fiscal policy is used to combat a recession (see examples illustrated in Figure 12-1). This deliberate action to stabilise the economy is often referred to as discretionary fiscal policy. Introduction. Revenue Receipts  Receipt which neither create liability nor lead to reduction in assets are called revenue receipts. Operational lag is the time elapsed between change in policy and its impact on the economy. ECONOMICS GRADE 12 SESSION 2 (LEARNER NOTES) Page 2 of 15 TOPIC 2: GOVERNMENT POLICY AND FORCASTING FOR BUSINESS CYCLES Learner Note: Remember that in periods of expansion, income, output and employment all increase; government does not welcome this. These receipts are classified under the followingheads(i) Market borrowings(ii) Other borrowings and loans(iii) Small savings(iv) Provident fund and other deposits, 6. Students should be prompted to complete questions 6-8 on pg. Administrative lag is the difficulty in changing policy once the problem has been recognized. AP Notes, Outlines, Study Guides, Vocabulary, Practice Exams and more! ‹ Chapter 11 - Aggregate Demand and Aggregate Supply, Chapter 6: Markets, Maximizers, & Efficiency Notes, Chapter 5: Elasticity: A Measure of Response Notes, Robert Mark's "Origins of the Modern World", Independent Study | AP Mircoeconomics - BOOK NEEDED [URGENT! Lower personal taxes may also increase risk‑taking and, therefore, shift supply to the right. The Class 12 Economics: Macroeconomics – Government Budget and Economy – Get here the Notes for Class 12 Economics : Macroeconomics – Government Budget and Economy. With an upward sloping AS curve, some portion of the potential impact of an expansionary fiscal policy on real output may be dissipated in the form of inflation. 1. The crowding‑out effect may be caused by fiscal policy. The government holds surplus tax revenues which keeps these funds from being spent. One major function of the government is to stabilize the economy. already have fiscal rules embedded in their laws, this note examines the issue of calibration on its own. Non-Plan Expenditure All expenditures of government not included in the current Five-Year Plan is termed as non-plan expenditure. The revenue expenditure is also of two types(i) Plan revenue expenditure(ii) Non-plan revenue expenditure. EduRev, the Education Revolution! If you need to contact the Course-Notes.Org web experience team, please use our contact form. deficit. Therefore, they use two policies to influence the business cycle. Political considerations:Government has other goals besides economic stability, and these may conflict with stabilization policy. The key factor that the Fed uses to affect the economy is the interest rate. 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