Essay on Current Fiscal Policy ( Macroeconomics )

1157 Words Apr 8th, 2016 5 Pages
Economics is defined as the branch of knowledge concerned with the production, consumption, and transfer of wealth. By definition it may sound simple, but in reality it is far from it. Beyond our personal economic life there is a whole world of complex economic systems that rely on each other to keep the economy afloat and to protect investors in the process. From small businesses (microeconomics) to government spending (macroeconomics) to different economic policies like Fiscal and Monetary America’s economy has it all.

When talking about employment fiscal policy plays a HUGE role. This term fiscal policy is normally associated with macroeconomics. Fiscal policy deals with the way government adjusts taxes and spending to have a desired effect on the nation 's economy. There are two different types of fiscal policy, expansionary (Surplus) and contractionary(Deficit). Expansionary fiscal policy deals with trying to stimulate the economy before or during a contraction of the business cycle. The government normally does this by increasing government spending. In the eyes of the government more spending equals more jobs, this increase in jobs equals more money being made which leads to more money that can be pumped back into the economy, stimulating it. Contractionary on the other hand does the exact opposite, and removes money from the economy. Raising taxes is the most common way to achieve this effect. By doing this you create a phenomenon know as Austerity which is where…

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