Question

• How would you use fiscal policy to make the citizens of the United States better off?

• What would be the costs of your solution? Explain.

Answer 1

Answer - The fiscal policy is related to the spending and taxation policies of the government. To make the citizens better off , the government must raise the spending and reduce the taxes so that people have more to spend. This will make them better off.

But this would come at a cost. The increase in the spending will require the external financial assistance thus increasing the debt of the government and contributing to the budget deficit. The decrease in the tax rates will lower the amout of revenue of the government thus bringing up the shortage of funds.