Definition of fiscal policy

A government's policy regarding taxation and public spending. Like monetary policy, it can be loose (with the emphasis on increased spending and lower tax revenue to boost economic activity, with the acceptance of a wider fiscal deficit) or tight (with the emphasis on cutting spending and boosting tax revenue, resulting in a slower economy and a higher chance of a fiscal surplus). [1]

The outcome of a budget on economic activity in particular through changes in tax and interest rates and government programmes. [2]

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