Fiscal policy

In economics and political science, fiscal policy is the use of government revenue collection (taxation) [1] and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in various sectors. These changes can affect the following macroeconomic variables in an economy: Aggregate demand and the level of economic activity; The distribution of income; The pattern of resource allocation within the government sector and relative to the private sector.

Fiscal policy refers to the use of the government budget to influence economic activity.

Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and [1][2] stability. The official goals usually include relatively stable prices and low unemployment. Monetary economics provides insight into how to craft optimal monetary policy. Monetary policy is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in order to avoid the resulting distortions and deterioration of asset values. Monetary policy differs from fiscal policy, which refers to taxation, government spending, and associated [3] borrowing.

Role of RBI in Controlling Inflation & Deflation

Reserve Bank of India which was established in 1935 is India's central banking institution, which controls the monetary policy of the Indian Rupee. The preamble of RBI describes its basic function as regulation over the issuing of bank notes and keeping of reserves in view of securing monetary stability in India as well as to operate the currency and credit system of the country so as to utilise it for national advantage. So the RBI carries the great responsibility of keeping the economy stable, be it the case of either inflation or deflation. In 1947 Reserve Bank of India was nationalised. India after independence has had a more stable record with respect to inflation than most other developing countries. Though India came face to face with deflation in 1977 and 2009, all over since 1950, the inflation in Indian economy has been in single digits for most

of the years. Every commercial bank has to keep certain minimum cash reserves with RBI. RBI uses this tool to increase or decrease the reserve requirement depending on whether it wants to bring into effect a decrease or an increase in the money supply. Credit Control is an important tool used by the Reserve Bank of India, that is, to control the demand and supply of money (liquidity) in the economyIts main objective being attainment of high growth rate while maintaining reasonable stability of the internal purchasing power of money. For those whore unaware, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. This happens when the demand increases and supply is less. This causes a reduction in the purchasing power per unit of money, which is not favorable. To overcome this, the RBI sells securities held with it by the commercial banks and other financial institutions. This reduces their cash lending and credit creation capacities which causes them to increase interest rates on lending money to people. This leads to a decrease in demand, as people start to save money instead of spending it.

Secondary Data Analysis

In social science research, you may often hear the terms primary data and secondary data. Primary data is data that was collected by the researcher, or team of researchers, for the specific purpose or analysis under consideration. Here, a research team conceives of and develops a research project, collects data designed to address specific questions, and performs their own analyses of the data they collected. The people involved in the data analysis therefore are familiar with the research design and data collection process.

Secondary data source

Secondary research occurs when a project requires a summary or collection of existing data. As opposed to data collected directly from respondents or "research subjects" for the express purposes of a project, (often called "empirical" or "primary research"), secondary sources already exist. These secondary soures could include previous research reports, newspaper, magazine and journal content, and government and NGO statistics. Sometimes secondary research is required in the preliminary stages of research to determine what is known already and what new data is required, or to inform research design. At other times, it may make be the only research technique used.

Causes of Inflation
So what exactly causes inflation in an economy? There is not a single, agreed-upon answer, but there are a variety of theories, all of which play some role in inflation:

1. The Money Supply

Inflation is primarily caused by an increase in the money supply that outpaces economic growth. Ever since industrialized nations moved away from the gold standard during the past century, the value of money is determined by the amount of currency that is in circulation and the publics perception of the value of that money. When the Federal Reserve decides to put more money into circulation at a rate higher than the economys growth rate, the value of money can fall because of the changing public perception of the value of the underlying currency. As a result, this devaluation will force prices to rise due to the fact that each unit of currency is now worth less.

2. The National Debt

We all know that high national debt in the U.S. is a bad thing, but did you know that it can actually drive inflation to higher levels over time? The reason for this is that as a countrys debt increases, the government has two options: they can either raise taxes or print more money to pay off the debt.

3. Demand-Pull Effect
The demand-pull effect states that as wages increase within an economic system (often the case in a growing economy with low unemployment), people will have more money to spend on consumer goods. This increase in liquidity and demand for consumer goods results in an increase in demand for products. As a result of the increased demand, companies will raise prices to the level the consumer will bear in order to balance supply and demand.

4. Cost-Push Effect
Another factor in driving up prices of consumer goods and services is explained by an economic theory known as the cost-push effect. Essentially, this theory states that when companies are faced with increased input costs like raw goods and materials or wages, they will preserve their profitability by passing this increased cost of production onto the consumer in the form of higher prices.

Causes of poverty

Poverty is an exceptionally complicated social phenomenon, and trying to discover its causes is equally complicated. The stereotypic (and simplistic) explanation persiststhat the poor cause their own povertybased on the notion that anything is possible in America. Some theorists have accused the poor of having little concern for the future and preferring to live for the moment; others have accused them of engaging in selfdefeating behavior. Still other theorists have characterized the poor as fatalists, resigning themselves to a culture of poverty in which nothing can be done to change their economic outcomes. In this culture of povertywhich passes from generation to generationthe poor feel negative, inferior, passive, hopeless, and powerless.

The effects of poverty

The effects of poverty are serious. Children who grow up in poverty suffer more persistent, frequent, and severe health problems than do children who grow up under better financial circumstances. Many infants born into poverty have a low birth weight, which is associated with many preventable mental and physical disabilities. Not only are these poor infants more likely to be irritable or sickly, they are also more likely to die before their first birthday.

10 Solutions to End Poverty We The People Demand: The full equality between men and women in public as well as private areas of life, a worldwide minimum wage of $20 per day and the end of child labor under the age of 16 with the creation of a subsidy for scholarship. 2. The guarantee of shelter, healthcare, education, food and drinking water as basic human rights that must be provided free to all. 3. A total redistribution of idle lands to landless farmers and the imposition of a 50% cap on arable land devoted to products for export per country, with the creation of a worldwide subsidy for organic agriculture. 4. An end to private monopoly ownership over natural resources, with a minimum of 51% local communal ownership in corporations, which control such resources as well as the termination of intellectual property rights on pharmaceutical drugs.

Unemployment is a setback in many countries, as many citizens are willing to work, at the current labor market, but cannot secure employment. Economic experts identified the causes and effects of unemployment in an effort to try and solve the problem.

Causes of unemployment

The main cause of unemployment in many countries is competition in the labor market, as there are few employment opportunities. This leads to a situation where for every available opportunity, there are more than one qualified individuals. This means that when one gets employment, others will lack employment. Currently increased technology shifts production from labor intensive to capital intensive. When these machines replace workers, they lack employment hence contributes to unemployment.

Effects of unemployment
Unemployment causes social and economic effects, which turn out to be a problem to society. The poverty index among the unemployed is high since these individuals do not have a source of income. On the social front, it increases illegal means of earning livelihoods. In a place where unemployment is on the rise, such a country has high cases of robberies, gambling, prostitution and bribery. This is a reason why unemployment contributes to social insecurities.

Solutions to Unemployment problem Demand side policies

Monetary policy and fiscal policy can both be used to increase short-term growth in the economy, increasing the demand for labour and decreasing unemployment. The demand for labour in an economy is derived from the demand for goods and services. As such, if the demand for goods and services in the economy increases, the demand for labour will increase, increasing employment and wages.

Supply side policies

Minimum wages and union activity keep wages from falling, which means too many people want to sell their labour at the going price but cannot. Supply-side policies can solve this by making the labour market more flexible. These include removing the minimum wage and reducing the power of unions, which act as a labour cartel. Other supply side policies include education to make workers more attractive to employers. Cutting taxes onn businesses and reducing regulation, create jobs and reduce unemployment.

Corruption and its causes and consequences We can say, corruption discourages investment, limits economic growth, and alters the composition of government spending, often to the detriment of future economic growth. The following sources have been known. Discussion to definition theories of corruption

Corruption is in large parts of the literature understood as one of the evils caused by economic underdevelopment. In particular in the so-called dependency theories, that see Third World underdevelopment as caused by capitalist exploitation, corruption is considered to be only one of the socio-political consequences of this exploitation, along with political authoritarianism and economic underdevelopment. Also liberal economic theory will usually explain the prevalence of corruption in terms of economic underdevelopment, and understand economic decline.

Corruption The root cause of corruption is common man. Corruption is neither caused by rich people nor by politicians. Corruption is not started by government employees. Corruption is created by common man. Corruption is fed by common man. Corruption is of/by/for common man. Common man is using government employees for maintaining corruption. Only common man can destroy corruption. Common man likes to kill corruption because he is affected maximum by corruption. But common man is waiting for government to destroy corruption. Government cannot destroy corruption without help of common man. Common man is ready to help government in all possible ways to destroy corruption. But common man cannot stop himself involving in corruption. Now it is responsibility of government to destroy corruption by taking help of common man to save common man.

Macroeconomics: Conclusion
Given the enormous scale of government budgets and the impact of economic policy on consumers and businesses, macroeconomics clearly concerns itself with significant issues. Properly applied, economic theories can offer illuminating insights on how economies function and the long-term consequences of particular policies and decisions. Macroeconomic theory can also help individual businesses and investors make better decisions through a more thorough understanding of what motivates other parties and how to best maximize utility and scarce resources. It is also important to understand the limitations of economic theory. Theories are often created in a vacuum and lack certain real-world details like taxation, regulation and transaction costs. The real world is also decidedly complicated

and their matters of social preference and conscience that do not lend themselves to mathematical analysis. Even with the limits of economic theory, it is important and worthwhile to follow the major macroeconomic indicators like GDP, inflation and unemployment. The performance of companies, and by extension their stocks, is significantly influenced by the economic conditions in which the companies operate and the study of macroeconomic statistics can help an investor make better decisions and spot turning points. Likewise, it can be invaluable to understand which theories are in favor and influencing a particular government administration. The underlying economic principles of a government will say much about how that government will approach taxation, regulation, government spending and similar policies. By better understanding economics and the ramifications of economic decisions, investors can get at least a glimpse of the probable future and act accordingly with confidence.