Economics: Fiscal Policy

I will also explain that this is difficult to decide whether fiscal policy or monetary policy was more effective than the other in stimulating growth in the U.S. after 2009 because each of them has their advantages and disadvantages in the short-term and long-term. My research has shown that both fiscal policy and monetary policy are effective in different aspects of stimulating the economic growth and

First of all, expansionary fiscal policy is passed to expand the money supply of an economy to encourage economic prosperity, growth, and combat inflation. Inflation is described as the overall increase of prices in an economy or country. There are several ways an

A contractionary fiscal policy occurs when government spending is reduced either through from an increase in tax revenues or reduction in public spending and is used in periods in which it seeks slow the growth of aggregate demand. While an Expansionary Fiscal Policy implies an increase in public spending through increases in public spending or lower tax revenues. You can apply expansionary fiscal policies when seeking to increase aggregate demand.

The fiscal policy is one form of the expansionary policy, which comes in many form, In addition to transfer payments and rebates, the two major example of expansionary fiscal policy are increasing government spending and tax cuts. The goal of an expansionary fiscal policy is to improve the growth of the economy level of a country. Also to help the government reduce unemployment, and increase consumer demand and avoid an economic collapse.

The government has two tools of expansionary fiscal policy which are expansionary and contractionary. The difference in the two tools is that by taking the expansionary route the government is opting to stimulate the economy. Expansionary is most often the path taken during times of high unemployment or during a recession. The government cuts taxes, rebates as well as government spending. Lastly, another option the government may choose to take is called the contractionary fiscal policy this means that the government decides to decrease the amount of money such as increasing taxes and reduce the amount of money the government is spending.

A budgetary stimulus is a necessity to help avoid recessions. Fiscal policy is when a government adjusts its’ spending levels and tax rates in order to impact the nation’s economic status. It is linked to the monetary policy which involves a bank and affects the nation’s money source. When there is an increase in unemployment and the economy is soon reaching a recession, the fiscal policy will help maintain the economy. The fiscal policy will decrease taxes and widely promote government spending. On the other hand, when unemployment is declining and prices are escalating, the policy will reduce government spending and raise the prices on taxes. The Great Recession was a horrific economic crisis that led businesses and buyers to drastically

Fiscal policy is often linked with Keynesianism (Michael Smith, Investpedia), which is derived from British economist John Maynard Keynes. Theories of Keynesianism have been used over time as they are popular and specifically applied to assuage economic downturns. The principle behind fiscal policy is influencing the level of aggregate demand in the economy to achieve economic factors of stabilizing the price, full employment and economic growth. Fiscal Policy is a government’s decision regarding spending and taxing. If a government wants to increase or restore growth in the economy, Spending rises. More items are purchased in spite of sticky prices, because of this the firm increases output.

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With the economy of the United States in shambles, illegal immigration and the effects it has on health care can no longer be ignored. America has a whole needs to be concerned and well informed of the issues rather than collecting information piecemeal by way of media or other biased groups. If illegal immigration stays its present course the American tax-payer will continue to fund the well being of individuals who have broken federal rules and regulations and are being supported by law abiding citizens. This argument is not about individual rights to live and prosper. It is not about race or discrimination of any sort. It is only about the effects on health care that I am addressing.

December 2007, a recession happened again in the United States; this lasted until June 2009. In between the years of 1948 to 2011, there have been 10 recessions total.(U.S. Bureau of Labor Statistics, 2012) The government used a policy called the Fiscal policy which was a starting point of the recovery after the most current recession in 2007. The fiscal policy includes government spending, taxation, and other factors that influence the economy. President Obama was trying to increase aggregate demand by using the Fiscal policy. Aggregate demand is a relationship between the price level and the output of goods as well as services.

Deficit spending takes place when the expenses of a government surpass the revenues over a specified financial period, resulting in the creation or enlargement of the government’s debt balance. The need to move out of n recession prompts governments to consider adopting deficit spending as a fiscal policy aiming at fostering economic recovery and eventual growth. In this respect, deficit spending is seen as an advantageous fiscal policy that seeks to improve the economic state of a particular country. Deficit spending is detrimental since it triggers significant losses in savings, as well as private investments. Consequently, interest rates heighten, denoting the “crowding out” effect in a troubled economy.

Monetary policy is the regulation of the money supply to influence variables such as inflation, employment, and economic growth. Fiscal policies, on the other hand, use the ability to tax and spend in order to influence those same variables (McEachern, 2014, p. 57). A blend of both of these policies is essential for improving the economy when a recession has occurred.

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Another advantage of discretionary fiscal policy is the expansionary component. Expansionary fiscal policy allows for the government to expand the money supply in the economy, rather it be to increase spending or cut taxes. When spending is increased, jobs are created. This happens through public work programs or indirectly through contractors. Through job creation, more money is spent, which causes a boost in demand and through that economic growth is possible. When the government cuts taxes and provides tax reliefs, more money is put directly into the pockets of business which stimulates greater business growth and competition. An example of this can be seen through the U.S. government's policy to cut taxes and give tax reliefs to household

This policy involves increasing government spending and cutting taxes, in order to spur economic output. But if the government decides they need to do the opposite the government may adopt concretionary fiscal policy. This involves a reduction in government spending and an increase in taxes when faced with an overheating economy. But these actions, may have other effects in the economy. For instance, and expansionary fiscal policy may lead to the crowding out of investment.