Unformatted text preview: the economy could slip into a depression like that of the 1930’s. If the economy began to overheat creating rampant inflation, then the government would not be able to raise taxes in an effort to cool the economy down if those additional tax revenues would create a budget surplus. The government would be left with little, if any, fiscal policy tools to use to manage the economy. Credit can be used wisely and productively, or it can be misused. This is true at the government level, and at the individual level. I am not sure that we want to “throw the baby out with the dirty bath water.” to force fiscal restraint. That may be a very expensive mistake for all parties. 50...
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.
- Fall '10