What Is Fiscal Imbalance? Fiscal imbalance occurs when a government’s future debt obligations are not in balance with its future income streams. There are two types of imbalances that can impact a government’s expenditures and revenue: vertical fiscal imbalance and horizontal fiscal imbalance. Obligations and income streams are measured at their respective present values and
What Is the Fiscal Multiplier? The fiscal multiplier measures the effect that increases in fiscal spending will have on a nation’s economic output, or gross domestic product (GDP). In general, economists define fiscal multipliers as the ratio of a change in output to a change in tax revenue or government spending. Fiscal multipliers are important
What Is Fiscal Neutrality? Fiscal neutrality refers to a principle or goal of public finance that fiscal decisions (taxing, spending, or borrowing) of a government can or should avoid distorting economic decisions by businesses, workers, and consumers. A policy change can be considered to be neutral to the economy in either a macro- or microeconomic
What Is Fiscal Policy? Fiscal policy refers to the use of government spending and tax policies to influence economic conditions, especially macroeconomic conditions. These include aggregate demand for goods and services, employment, inflation, and economic growth. During a recession, the government may lower tax rates or increase spending to encourage demand and spur economic activity.
What Is Fiscal Year-End? The term “fiscal year-end” refers to the completion of any one-year or 12-month accounting period other than a typical calendar year. A fiscal year is often the period used for calculating annual financial statements. A company’s fiscal year may differ from the calendar year, and may not close on December 31
What Is the Fisher College of Business? The Fisher College of Business is the business school at Ohio State University. Founded in 1916 and located in Columbus, Ohio, the school offers both undergraduate and graduate programs. The Fisher College of Business’s ranked as the 41st-best program in the U.S. by Businessweek for 2019-20. It received
What Is the Fisher Effect? The Fisher Effect is an economic theory created by economist Irving Fisher that describes the relationship between inflation and both real and nominal interest rates. The Fisher Effect states that the real interest rate equals the nominal interest rate minus the expected inflation rate. Therefore, real interest rates fall as
What Is Fitch Ratings? Fitch Ratings is an international credit rating agency based out of New York City and London. Investors use the company’s ratings as a guide as to which investments will not default and subsequently yield a solid return. Fitch bases the ratings on factors, such as what kind of debt a company
The five Cs of credit are important because lenders use these factors to determine whether to approve you for a financial product. Lenders also use these five Cs—character, capacity, capital, collateral, and conditions—to set your loan rates and loan terms. What Are the 5 Cs of Credit? The five Cs of credit is a system
What Is the Five Percent Rule? The five percent rule is a stipulation of the Financial Industry Regulatory Authority (FINRA), which oversees brokers and brokerage firms in the U.S. Dating back to 1943, it stipulates that a broker shouldn’t charge commissions, markups, or markdowns of more than 5% on standard trades, both stock exchange listings and
