How does the government use fiscal policy to adjust our economy? Can
you provide some examples as it is increased and as it is decreased?
Fiscal policy is the means in which the government uses to "adjust"
the economy, by spending money. If you are asking this question
because you are taking an economics class, you may want to mention the
name Keynes, if I remember correctly. It was Keynes, who believed that
when the economy is "recessed" ie. during the great depression, would
benefit greatly by economic activity, if the gov't would spend money
to hire people to dig holes and to fill them back up. Keynes believed
that the economy would be at the healthiest state when the government
can regulate the rate of expansion and contraction, rather than
leaving it up to the invisible hand. This is what we call Fiscal, and
Monetary (controlling interest rates) policy. Adam Smith would be the
antithesis.
Please correct me if I'm wrong after asking your professor. |
