Macroeconomic Policy Issue

Introduction

"Deficit-spending" was the first great political challenge that the Keynesians had to face down from the very beginning. The Employment Act of 1946, for instance, was most fiercely resisted on the basis that it would lead to unbalanced budgets. As quickly as the word spread, "Keynesianism" and "deficit-spending" became virtually synonymous in the lexicon of politicians. (Snowdon, 87)

Macroeconomic Policy Issue

The basic problem with government buget deficits, in the layman's eyes, derived from reasoning by personal analogy: just as any person must pay back his personal debts by curtailing future expenditure, the accumulation of government debt by current deficit-spending would ...