Explain how Taxation as fiscal policy instrument can help in the following:

1. Economic Development

2. Full Employment

3. Price Stability

4. Control of Cyclical Fluctuations

5. Reduction of BOP Difficulties

6. Non-Revenue Objective                                                                                         

The decision to change the level, composition or timing of government expenditure or to vary the burden, the structure or frequency of the tax payment is a fiscal policy. Fiscal policies could be automatic stabilizers or discretionary.

 

Required: Explain automatic stabilizers and discretionary fiscal policies.

Answer rating: 100% (QA)

Fiscal policy plays a key role in elevating the rate of capital formation both in the public and private sectors Through taxation the fiscal policy helps mobilise considerable amount of resources for ... View the full answer