Fiscal Policy
Government spending, taxation, budget deficits, and the national debt — and how fiscal decisions ripple through the economy.
Fiscal policy refers to government decisions about spending and taxation, distinct from the monetary policy set by central banks. Expansionary fiscal policy — higher spending or lower taxes — aims to stimulate a weak economy but can widen budget deficits and add to the national debt if not offset elsewhere; contractionary fiscal policy does the reverse to cool an overheating economy or rein in deficits. Because fiscal and monetary policy can work in tandem or in opposite directions — for example, government stimulus spending while a central bank simultaneously raises rates to fight inflation — understanding both together gives a fuller picture of the forces shaping growth and prices.
Explore Fiscal Policy
Taxation Policy Explained: How Governments Raise Revenue
Taxes are how governments fund spending. Here is how the major tax types work and how they affect the economy, without endorsing any specific rate.
By Tamanna Shaikh · July 5, 2026
How Government Spending Works and Why It Matters to the Economy
Government spending is one of the four components of GDP and a constant subject of political debate. Here's how the budget actually breaks down, and how spending decisions ripple through the economy.
By Deepak Kuldeep · July 5, 2026