Homework Question on Fiscal Stimulus Measures
- Some reject fiscal stimulus measures in all policy forms. Explain what the various limitations are to a successful fiscal stimulus.
- Be sure to consider the damaging activities and decisions of (a) private corporations, (b) commercial banks, and (c) wealthy individuals.
- Explore how these three leadership groups, each in their own way, frustrate and foil the goals of a fiscal stimulus program.
Homework Answer on Fiscal Stimulus Measures
Primarily, a fiscal stimulus program has three options namely; increase transfers, use of tax cuts, and increased government spending. Nonetheless, all of the options mentioned above have a limitation to a prosperous fiscal stimulus program. The options shall make the state budget to grow. Therefore, the economic stimulus package may act as a short-term improvement to a country economy since the government must get a way to fund this particular program.
A situation where the government requires spending some money that was not revenue from the taxes may result in the budget deficit, and thus it may need to borrow some fund and most probably from the reserve foreign banks or even through the vending of bonds. For instance, in 2009, President Obama’s administration released stimulus packages with the principal intention of attempting to fix the slump bound economy.
However, fundamental questions later surfaced regarding the long-term outcomes of the stimulus programs. Is the stimulus package more harmful or more beneficial to the already slumping economy? Therefore, this essay also seeks to discuss decisions and damaging activities of private corporations, wealthy individuals, and commercial banks to fiscal stimulus packages as well as unfold how the above leadership groups foil and frustrate the aims of the financial stimulus package.