Goals of Fiscal Policy
Demand Management (Fiscal Policy)
Syllabus requirement
Targets include low inflation, low unemployment, economic growth, equity in income distribution, and external balance.
Summary
This topic explains the goals of fiscal policy and how governments use taxation and public spending to influence aggregate demand, control inflation, reduce unemployment, stabilise the business cycle, promote long-term growth, correct external imbalances, and redistribute income. It compares expansionary and contractionary fiscal measures and presents differing views (Keynesian vs monetarist/new classical) on how effective fiscal policy is for stimulating output and controlling inflation.
Real-world examples for this unit

U.S. COVID-19 Fiscal Relief Response

Japan's 2025 Economic Package: Expansionary Fiscal Policy

Romania's 2025–26 Fiscal Consolidation: Contractionary Fiscal Policy

Germany's €500bn Infrastructure Fund: Fiscal Policy and Long-Run Growth