12472887
Description
Mind Map by 17Y6C32 KOH HUI WEN, updated more than 1 year ago
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Created by 17Y6C32 KOH HUI WEN
almost 8 years ago
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Fiscal Policy
- Types of FP
- Discretionary FP
- Expansionary FP
- ↑ G / ↓ T
- ↑ Disposable Y, ↑ C
- ↑ after-tax π, ↑ I
- ↑ EG, ↑ Emp
- ↑ EG, ↑ Emp
- ↑ Disposable Y, ↑ C
- ↑ G / ↓ T
- Contractionary FP
- ↓ G / ↑ T
- ↓ Disposable Y, ↓ C
(including M)
- ↓ after-tax π, ↓ I
- ↓ Inflation, ↑ BOT
- ↓ Inflation, ↑ BOT
- ↓ Disposable Y, ↓ C
(including M)
- ↓ G / ↑ T
- Expansionary FP
- Automatic stabilisers
- Already in-built,
no deliberate gov
action needed
- Progressive Y
tax structure
- eg. Economic boom,
↑ Y, ↑↑↑ Taxes
- Limits ↑ Disp Y, Limits ↑ Cd,
Limits ↑ in AD & EG
- Limits ↑ Disp Y, Limits ↑ Cd,
Limits ↑ in AD & EG
- Redistribute Y
- ↓ Y inequality,
> Inclusive EG
- ↓ Y inequality,
> Inclusive EG
- eg. Economic boom,
↑ Y, ↑↑↑ Taxes
- Transfer payments
(UE benefits)
- eg. Recession, ↑ UE,
↑ UE benefits
- Limits ↓ Disp Y, Limits ↓ Cd,
Limits ↓ in AD & EG
- Limits ↓ Disp Y, Limits ↓ Cd,
Limits ↓ in AD & EG
- eg. Recession, ↑ UE,
↑ UE benefits
- Progressive Y
tax structure
- Already in-built,
no deliberate gov
action needed
- Discretionary FP
- Manipulating G & T to
primarily influence
AD, though can also
have SS-side effects
- Advantages of FP
- > direct impact so
> certain Δ in AD
- Ability to target
certain sectors
- eg: Infrastructure,
Merit Goods
- eg: Infrastructure,
Merit Goods
- > direct impact so
> certain Δ in AD
- Limitations of FP
- Time lags
- eg: Recognition &
Implementation
- By the time effect
of EFP take place,
economy may be
in boom
- Cause economy
to overheat
- Cause economy
to overheat
- By the time effect
of EFP take place,
economy may be
in boom
- eg: Recognition &
Implementation
- ↓ / ↑ tax may not
↑ / ↓ spending
- Also dependent on
economic outlook,
csr/biz confidence
- Also dependent on
economic outlook,
csr/biz confidence
- Inflexibility of G
- eg. Construction projects
- Ongoing infrastructure
projects cannot stop
halfway to stop spending
- Ongoing infrastructure
projects cannot stop
halfway to stop spending
- eg. Construction projects
- Crowding
out effect
- When gov borrow
to fund EFP
- ↓ SS for loanable funds,
↑ i/r, ↑ COB
- ↓ C & ↓ I, negate effects of EFP
- ↓ C & ↓ I, negate effects of EFP
- ↓ SS for loanable funds,
↑ i/r, ↑ COB
- When gov borrow
to fund EFP
- Size of k
- eg. SG small k size
(high MPS & MPM)
- Δ in AD will not be
significant through
k process
- Δ in AD will not be
significant through
k process
- eg. SG small k size
(high MPS & MPM)
- Nature of
economy
- eg. SG dependent
on Ext DD
- Not effective in ↑ AD since
EFP only affect Dom DD
- Not effective in ↑ AD since
EFP only affect Dom DD
- eg. SG dependent
on Ext DD
- Conflicts w other
macrogoals
- eg. EFP to ↑ EG & ↑ Emp
- May cause
↑ inflation
& ↓ BOT
- May cause
↑ inflation
& ↓ BOT
- eg. EFP to ↑ EG & ↑ Emp
- Time lags
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