Fiscal Policy refers to a policy of Government Finance. It is the use of government spending and taxation policies to influence the economy. This policy is used by the government to stabilize the economy, achieve economic growth, control inflation and unemployment.

Components of Fiscal Policy:

1. Government Spending: The government spends money on various projects such as infrastructure, education, healthcare, defense, etc. This expenditure helps to boost economic activity and employment.

2. Taxation: The government collects taxes from individuals and businesses. Taxation is used to regulate the economy by reducing or increasing aggregate demand.

3. Transfer Payments: The government provides benefits to individuals such as unemployment benefits, welfare, etc. These payments help in reducing poverty and increasing consumption.

Objectives of Fiscal Policy:

1. Economic Growth: Fiscal policy is used to stimulate economic growth by increasing government spending and reducing taxes.

2. Price Stability: Fiscal policy is used to control inflation by reducing government spending and increasing taxes.

3. Employment: Fiscal policy is used to create employment opportunities by increasing government spending on infrastructure and other projects.

4. Distribution of Income: Fiscal policy is used to reduce income inequality by providing transfer payments to the poor and increasing taxes on the rich.

Conclusion:

Fiscal policy is an important tool used by the government to regulate the economy. It helps in achieving economic growth, controlling inflation, reducing unemployment and poverty. It is important for the government to use fiscal policy effectively to achieve its objectives.

Fisacal policy refers to a policy of government finance because by it government adjust it's spending levels and tax rates to monitor and influence a nation's economy .