fiscal policy
That part of government policy concerning taxation and other revenues, public spending, and government borrowing (the public sector borrowing requirement).
| US fiscal policy has been directed largely at achieving or maintaining full employment while avoiding high inflation. Raising or lowering income taxes or corporate taxes can govern the level of economic activity, and government spending can sustain activity when private funds are unavailable. The tax cuts of the early Reagan administration helped to generate a long economic boom and brought an end to a severe recession with inflation (called a stagflation), but the budget deficits incurred remain a critical economic problem. |
