Fiscal Policy

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School

Florida International University *

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2023

Subject

Economics

Date

Feb 20, 2024

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docx

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Uploaded by SargentIce5827

3.03 Fiscal Policy Part A: 1. Fiscal policy refers to the use of government spending and taxation in order to influence the economy. The goals of fiscal policy includes stabilizing the economic growth, reducing unemployment, and controlling inflation. They do this by using tools like taxation, which are tax cuts and tax hikes, and government spending. This is typically controlled by the Congress in the United States 2. No, I don’t think Congress should create a law mandating a balanced federal budget because it can then limit the government’s ability to respond well to time of economic deficits or emergencies. Part B: Article title/headline: President Biden Announces an Additional $9 Billion in Student Debt Relief for 125,000 Americans Source (URL): https://www.whitehouse.gov/briefing-room/statements- releases/2023/10/04/president-biden-announces-an-additional-9-billion-in- student-debt-relief-for-125000-americans/ Date of publication: October 4, 2023 1. Describe the fiscal policy action that is discussed in the article, including its status (such as under debate, approved, or rejected). In this article President Biden announced an addition $9 billion in student debt relief for 125,000 Americans. This debt relief is part of the efforts to ease burden of student loan debt and making higher education more affordable and accessible to a wider range of people.

2. Would the fiscal policy action discussed in the article promote price stability, full employment, and/or economic growth? Explain. This fiscal policy action would likely have a positive impact and promote economic growth and more employment. By reducing student debt, individuals have more disposable income and can cause more consumer spending, therefore leading to economic growth. But the direct impact of price stability and employment may be limited and depend on many different factors. 3. Would the fiscal policy action discussed in the article, if approved, contribute to creation of a budget surplus or a budget deficit? Would this likely increase, decrease, or not affect the national debt? Explain. If approved, this fiscal policy action would contribute to a budget deficit because the government would allocate funds for student debt relief. This would most likely increase national debt because the government would need to borrow more money to cover the cost of the debt relief. 4. Do you approve or disapprove of the fiscal policy action described in the article? Explain your response and identify at least one tradeoff for your choice. I approve of the fiscal policy action I cited because it is a vital relief for many individuals that are ‘drowning’ in debt. It’s an opportunity for many to improve their financial well-being and can stimulate economic activity. One tradeoff could be the opportunity cost of allocating funds to students’ debt relief rather than other pressing economic or social needs.

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