How Fiscal Policy Impacts the Nation’s Economy:
Fiscal Policy is the means by which the government can influence the nation’s economy through adjustments to spending levels, interest rates, tax rates, and money supply. In essence, the central bank holds meetings and takes measures to regulate critical aspects of the economy such as unemployment, business cycles, inflation, etc. Fiscal policy doesn’t come without argument, however, as individuals squabble over how much involvement (or “interference”, depending on your viewpoint) the government should really have.
Fiscal policy is important because it can have an impact on the stock market. For example, it’s a widely held belief that the market has been up-trending so much this year because of President Trump’s proposed corporate tax deduction. Less tax on corporations means increased bottom lines, which gives investors more reason to put their money to work in the stock market. Overall, it takes a delicate balance of adjusting tax rates, public spending, and other elements in order to regulate the economy. Most people agree that policymakers are needed to keep the economy running smoothly with proper levels of inflation, employment, and taxes.