Meaning of Fiscal Policy In Public Finance - SS2 Economics Lesson Note

Fiscal policy is a tool used by governments to manage the economy through the use of taxes, government spending, and borrowing. It is one of the main components of public finance, which is the study of how governments collect revenue, spend money, and manage debt.

Fiscal policy refers to the government's decisions about how to raise and spend money. Fiscal policy can also be used to address specific issues or challenges, such as income inequality, inflation, or unemployment. For example, the government may introduce targeted tax policies or spending programs to help low-income households or to support industries that are struggling. 

When the government wants to stimulate the economy, it may increase spending on public goods and services such as infrastructure, education, or healthcare. This increased spending can create jobs and boost economic activity. Similarly, when the government wants to slow down the economy, it may decrease spending or increase taxes to reduce the amount of money people have to spend.