ECON 2002.01 Lecture Notes - Lecture 24: Fiscal Policy, Government Debt, Business Cycle
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Econ 2002. 01 lecture 26 fiscal policy part two. It"s very difficult to make a fiscal policy. This is because: governments can be divided, making decision making more cumbersome. Implementation lag: it takes time to plan, budget, and implement new policies: effectiveness lag: the time it takes for a policy to be budgeted for properly and implemented in the most efficient way. (ex. It wasn"t recognized that a recession was occurring in the us until nearly a year after it began. Automatic stabilizers: actions that automatically adjust to an economy"s present conditions, unemployment benefits: when people collect transfer payments government"s transfer payments increase, tax brackets, as people"s wealth fluctuates, their tax rate does too. Deficits and the national debt: deficit: amount by which annual government spending exceeds tax revenue, surplus: amount by which annual tax revenue exceeds government spending, national debt is held by different institutions and groups.