Explain what fiscal policy is - using taxation
Explain the main U.K. objectives such as full employment, balanced imports and exports, price stability and economic growth.
Make your first point on how taxation could affect one of the factors. You could reduce income tax for example which would increase the incentive to work and so increases employment which achieves the full employment component. You can then argue that a conflict could take place as higher employment means greater disposable income and so higher demand in the economy which could cause demand pull inflation and so not achieving the price stability component.
You could also talk about progressive taxes (taking higher proportion from the rich) and argue that it reduces inequality. It could however mean that some workers decide to work abroad which conflicts with economic growth as well as reducing tax revenue which could lead to a budget deficit which could have an effect on other objectives such as employment.
Write about 3 points which are fully analysed and evaluated. Lastly, give a substantiated conclusion on whether fiscal policy is an effective tool to use and maybe monetary may be more effective and explain why.