Singapore the output will increase. Conclusion In the

Singapore has maintained a prudent approach by building up budget surpluses over the business cycles through cutting down on government borrowing and deficit spending.

This conservative stance of fiscal policy has reduced inflation growth and national debt that have plagued many other countries. To balance the budget of a higher spending on healthcare, infrastructure and security, Goods and service tax is primed to increase from 7% to 9% in the near future. This move is aimed at reducing aggregate demand sufficient to return the economy to potential output without worsening inflation. In this way, if tax revenue equals expenditure, the government has a balanced budget. If government spending increases and other components of spending stay same, the output will increase.

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Conclusion In the short and long run, it is essential for the government to play a huge role in the economy not just as a surveillance compliance body but also to regulate and influence the market forces according to internal and external factors. Some of its vital roles include:• Setting a stable political system Political stability in the country will raise confidence levels to the rest of the world and give rise to a more stable and strong exchange rate due to the fact that more citizens and foreigners are willing to entrust their investment in the country.


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