FISCAL POLICY

Fiscal Policy

Fiscal Policy

Economics is the social science that studies the production, distribution, exchange and consumption of goods and services. Investigation of the economy focuses on how individuals, corporations, societies, and decided to use the scarce resources provided by nature and previous generations. Both policies in the modern economy is none other than fiscal and monetary policies. While they both address the economy, you could not find a stranger on a pair of opposites than these. The reason is that fiscal policy is defined as the change in public spending and / or taxes to achieve specific economic goals, such as low unemployment, stable prices and economic growth.

On the other hand, monetary policy is defined as the change in money supply or changes in supply, especially in order to achieve macroeconomic goals. The reason why these two strategies can not be greater, because the various fiscal policy deals with the government, while monetary policy is seen more with private enterprises and households, focusing more on individual rather than as a whole. Of the government expenditure on government taxes, fiscal policy covers all the economy. For example, military spending, welfare, Medicare, and only a few of the many types of public spending, that our country is stressed within the framework of fiscal policy.

Fiscal policy describes two governmental actions by the Government. First, taxation. By levying taxes the government receives revenue from the population. Taxes come in many varieties and are used for various specific purposes, but also the key concept is that taxation is a transfer of assets from the people to power. The second effect of public spending. This may take the form of salaries for civil servants, social benefits, a smooth road, or a weapon. When the government spends, the transfer of assets from themselves to the public. Since taxation and public expenditures amount to reverse the flow of assets, we can think of them as the opposite policy. During the Great Depression, unemployment was high and production costs, together with the fully down. In this great sea of chaos, one voice was loud to be heard.

That was the theory of John Maynard Keynes, he proposed the idea that the government is responsible to maintain the smooth functioning of the economy, and the only way to do so by government spending1. First, Roosevelt and his advisors were not optimistic in the way Keynes. Although by the end of the 1920's and the beginning of the Second World War, Roosevelt was the tax cuts and increased government spending. When Harry Truman took over as president, he said: "War is hell, but the world may be worse." Truman had been pretty much saying that without the mass production of the war business to lower their employment leading the country back into depression. Therefore, if Truman does not realize that the end of the war would mean the end of the high level of employment, it would be more devastating depression in the ...