Question

Some economists argue for the use of fiscal policy to solve economic problems; some argue against it.

Identify whether each argument in the following table is for the use of fiscal policy or against it. Argument For Against
The economy is self-regulating.
The crowding out effects of fiscal policy are large.
Fiscal policy is characterized by long lags.
The economy is not always self-regulating.

Answer 1

Some economists argue for the use of fiscal policy to solve economic problems; some argue against it.

Step-by-step explanation:

Argument For Against

The economy is self-regulating.

The crowding-out effects of fiscal policy are large.

Fiscal policy is characterized by long lags.

The economy is not always self-regulating.

FISCAL policy is the use of government spending and. taxation to influence the economy. Governments typi- cally use fiscal policy to promote strong and sustain- able growth and reduce poverty.

Fiscal policy is the use of government revenue collection (mainly taxes but also non-tax revenues such as divestment, loans) and expenditure (spending) to influence the economy. Through the fiscal policy, the government of a country controls the flow of tax revenues and public expenditure to navigate the economy.

Balance between structural (or cyclically adjusted) revenue and expenditure; or limit on structural (or cyclically adjusted) deficit as a proportion of GDP. Balance between current revenue and current expenditure (that is, borrowing permitted only to finance capital expenditure).