Posted: March 6th, 2014
Most economists believe that fiscal policy can help move the economy in a desired…
1. Most economists believe that fiscal policy can help move the
economy in a desired direction but cannot reliably be used
to fine-tune the economy to a position of price stability and
full employment. Nevertheless, fiscal policy is a valuable
backup tool for aiding monetary policy in fighting significant
recession or inflation.
economy in a desired direction but cannot reliably be used
to fine-tune the economy to a position of price stability and
full employment. Nevertheless, fiscal policy is a valuable
backup tool for aiding monetary policy in fighting significant
recession or inflation.
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2. The large Federal budget deficits of the 1980s and early
1990s prompted Congress in 1993 to increase tax rates and
limit government spending. As a result of these policies,
along with a very rapid and prolonged economic expansion,
the deficits dwindled to $22 billion in 1997. Large budget
surpluses occurred in 1999, 2000, and 2001. In 2001 the
Congressional Budget Office projected that $5 trillion of
annual budget surpluses would accumulate between 2000
and 2010
2. The large Federal budget deficits of the 1980s and early
1990s prompted Congress in 1993 to increase tax rates and
limit government spending. As a result of these policies,
along with a very rapid and prolonged economic expansion,
the deficits dwindled to $22 billion in 1997. Large budget
surpluses occurred in 1999, 2000, and 2001. In 2001 the
Congressional Budget Office projected that $5 trillion of
annual budget surpluses would accumulate between 2000
and 2010
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