Fiscal policy refers to the government's decisions regarding taxation, government spending, and borrowing, designed to influence the economy. It aims to manage economic fluctuations by adjusting public finance mechanics such as federal budgets and deficits.
Progressive taxation is a tax system where the tax rate increases as the taxable amount increases. This taxation method aims to distribute the tax burden more equitably, making wealthier individuals or entities pay a higher portion of their income or assets.
Proportional taxation, also known as a flat tax, is a tax system where the tax rate remains constant regardless of the individual's income level. Unlike progressive or regressive tax systems, proportional taxation applies an equal tax rate to every taxpayer.
Stagflation is an economic condition characterized by a combination of stagnant economic growth, high unemployment, and persistent inflation. This rare phenomenon presents significant challenges for policymakers and investors, as traditional remedies for inflation or stagnation can worsen the other condition.
