by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How can Fiscal Policy Can Affect Technology Development? Research and development (R&D) efforts are the lifeblood of new technology. Fiscal policy can encourage R&D using either direct spending or tax policy. Government could spend more on the R&D that it...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the US Labor Force? The US Labor force is the number of employed plus the unemployed. What is Employed and Unemployed? Employed: currently working for pay Unemployed: Out of work and actively looking for a job Should we count everyone without a job as...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How do the Effects of Fiscal Policy Lag? The government can change monetary policy several times each year, but it takes much longer to enact fiscal policy. Imagine that the economy starts to slow down. It often takes some months before the economic statistics signal...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Temporary and Permanent Fiscal Policy? A temporary tax cut or spending increase will explicitly last only for a year or two, and then revert to its original level. A permanent tax cut or spending increase is expected to stay in place for the foreseeable...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are the Limitations of Fiscal Policy? Fiscal policy can help an economy that is producing below its potential GDP to expand aggregate demand so that it produces closer to potential GDP, thus lowering unemployment. However, fiscal policy cannot help an economy...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How Do Politics Affects Discretionary Fiscal Policy? A final problem for discretionary fiscal policy arises out of the difficulties of explaining to politicians how countercyclical fiscal policy that runs against the tide of the business cycle should work. Some...
