(BQ) Part 2 book "Economic the basic" has contents: Fiscal policy, monetary policy, the financial markets, international trade, technological change, economics of the labor market, the distribution of income, the distribution of income, economics of energy, the environment, and global climate change. | CH 11 FISCAL POLICY I n 2008 and 2009, the federal government used its financial muscle to combat the Great Recession. President George W. Bush signed a bill to help prop up the failing banking system, and President Barack Obama followed with legislation that pumped $787 billion worth of federal spending and tax cuts into the faltering economy. These increases in federal spending and cuts in taxes helped prevent the Great Recession from turning into something worse. But it also left the United States with a huge budget deficit as spending far exceeded tax revenues. In this chapter, we will analyze the economic effects of fiscal policy—that is, decisions about government spending, taxes, and debt in both the short run and the long run. In the short term, fiscal policy consists of the government’s budget decisions that affect employment, output, and inflation over the next couple of years. That includes the spending increases and tax cuts that the government enacted to fight the Great Recession. In the long term, fiscal policy creates the link between government spending and taxation decisions and the country’s economic growth. Fiscal policy is probably the most politically charged area of economics. Each year, lawmakers and government officials in Washington decide how to allocate trillions of dollars. The result is a federal budget hundreds of pages long in which every sentence can make a big impact on someone’s life or company. And of course, members of Congress get elected in part because of their ability to influence the budget in favor of individuals and comFISCAL POLICY panies that donated Decisions about govmoney to campaigns. ernment spending, taxes, and borrowing in But leaving politics the short and long run. aside, reputable economists disagree about the right way to run fiscal policy. Some favor a larger role for the government, especially when the economy is in a slump. Others argue for shrinking government spending .
