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fpolicy2 - FISCAL POLICY Issac Deese Tomesha Lindsay...

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FISCAL POLICY Issac Deese Tomesha Lindsay America’s economic prowess reveres many countries abroad, whether rich or poor, how the American dollar is able to sustain its strength despite all the economic changes is a concern for many admirers of the
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American way of life. One major contribute to the success of the American economy is the fiscal policy. “Fiscal policy is the use of government expenditures and revenue collection to influence the economy” (DawnJournal). In other words, taxes, transfer payments, and government spending are the main factors that determine fiscal policy. In the United States, fiscal policy plays a major role in the stabilizing of the American economy. Monetary policy gears to benefit big businesses while fiscal policy implements on the behalf of the people. If consumers have no means to demand goods and service, the direct result, is for the supply side of the economic curve to suffer. John Maynard Keynes, a British economist, argues a theory that aggregate demand affects the state of the economy. Many have debated against Keynes theory and have opted to prove monetary policy is the best policy but not quite successful. Fiscal Policy is more efficient than monetary policy because it is more effective during a recession by stimulating demand and increasing economic growth, more suitable for reducing unemployment, boosting social investment by focusing more on people's livelihood, and generates a high rate of return on bonds from foreign countries. Fiscal policy is the best policy for economic stabilization and growth in the United States. When the economy is slow or sluggish, the government may cut taxes, which allows consumers to spend more money because of the extra cash. This type of expansionary fiscal policy is vital during a recession. As a result, the economy starts to grow rapidly and tends to be inflationary. The government raises taxes or reduces spending to slow the economy down by enforcing a contractionary fiscal policy.
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