Fiscal Policy Flashcards
(13 cards)
2 types of FP are…
expansionary and contractionary
expansionary FP is used during…
recession
contractionary FP is used during
DPI
EFP does what?
increase G or reducing tax, increasing budget deficit/decreasing budget surplus
CFP does what?
decrease G or increase tax
reduce C & I
3 examples of fiscal policy allows sg to achieve inclusive growth
skills upgrading
workfare
progressive tax system
how does skill upgrading promote inclusive growth
skills upgrading (e.g. skillsfuturesg)
allows employees to build and deepen skills, thus making them more employable and chance for earning more
how does workfare promote inclusive growth
lower paid workers are provided grants to stay in workforce
how does progressive tax system promote inclusive growth
higher income = higher tax
then taxes are redistributed to lower income
limitation of progressive tax system
if the tax system is too progressive, workers are less likely to work hard and upgrade their skills and thus reduces productivity
how does cutting taxes during recession promote growth?
increase HH dp, rise in PP & C
stimulates further rounds of income-induced spending = solving cyclical unemployment and improving SOL
example of skills upgrading
skillsfuture provides resources, support, and financial assistance to help Singaporeans upskill, reskill, and pursue lifelong learning
example of workfare
Workfare Income Supplement supplements the income and CPF savings of eligible lower-wage workers to encourage them to continue working and build their retirement savings
