Essay on Fiscal Policy As An Economic Issue

1442 Words Oct 9th, 2016 6 Pages
Fiscal Policy can be considered an economic issue because any change in the government budget can have a significant impact on the economy on a whole as well as the people living in it. Fiscal Policy consists of changes in government expenditures and/or taxes to achieve economic goals, such as low unemployment, price stability, and economic growth. “Federal tax and spending policies can affect the economy because of the impact on federal borrowing, private demand for goods and service as well as people’s incentives to work and save” (“Economics Effects,” n.d.). There may be times where benefits are surpassed by the costs of government policies. This once again may be a result of incentives by government officials and employees. There are two types of policies used by the government. These policies include expansionary and contractionary. There also the Keynesian economists as well the Classical economists. Each of these economists has different views on the fiscal policy. Some see the fiscal policy as ineffective and others effective. The government uses fiscal policies for various reasons. There are many scenarios in which countries such as Japan and even the US has use this policy. It may be used for unemployment rates or even to help a country that has experienced a natural disaster such as a tsunami. Although there may be various advantages of this policy, there’s also disadvantages.
Advantages of Using Contractionary Fiscal Policy Controlled inflation is one…

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