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Essay / Research Paper Abstract
A 4 page paper discussing fiscal policy, how it is used, what its goals are and the tools of fiscal policy. Fiscal policy affects interest rates, but its direct tools are taxation and government spending. Bibliography lists 5 sources.
Page Count:
4 pages (~225 words per page)
File: CC6_KSeconFisPol2.rtf
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Unformatted sample text from the term paper:
policy is: "Government spending policies that influence macroeconomic conditions. These policies affect tax rates, interest rates, and government spending, in an effort to control the economy" (Fiscal Policy, n.d.).
It is closely linked with monetary policy, but addresses different areas. Both directly affect the course of the overall economy. Assessing Fiscal Policy
In Keynesian economics, "government deficit spending is cyclically stimulative whether it is financed by borrowing or by newly created money" (Friedman, 1999). On the other side, the
"monetarist view is that spending financed by newly created money is cyclically stimulative whether the spending is by the government or the private sector" (Friedman, 1999).
The problem with the monetarist view is that government spending may or may not serve to stimulate the economy. The determining factor lies in whether the
government borrows to support its spending. There is only so much money available to borrow, and when governments share increases to a disproportionate level, then there is less capital
available for consumers either to spend or borrow Friedman (1999) notes that it is difficult to distinguish which of the views is
the most reliable "on the basis of empirical evidence, because fiscal stimulus generally is accompanied by monetary stimulus." The best evidence, according to Friedman (1999), is revealed "by those
rare occasions when fiscal and monetary policy go in different directions." One of those occasions occurred in Japan. Between 1992 and 1999,
the government of Japan attempted to stimulate the economy through fiscal policy. At the same time, monetary policy remained restrictive. During those years, growth in total money available
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