Government spending is a major workout. 🥵🏋️ Whether Uncle Sam is doing jumping jacks to print more stimmy checks or cooling down with a stretch on those tax breaks, he's always moving and shaking. 🤸
Fiscal policy is basically how the government decides to spend cash and create tax policies. They flex their fiscal policy muscles to influence the economy, especially when things get a little cray-cray. 😵💫💸
Here’s Five Fast Facts on fiscal policy and what it means for the average Jane:
- 🧘🏻♀️Workout & Cool Down - One way to understand fiscal policy is to think of the government trying to keep the economy even Steven. For example, during a recession, the government may lower tax rates or increase spending to drive up demand and get people to hit their favorite outdoor shopping center. On the other hand, to fight against inflation, it might jack up rates or slash spending to cool things down.
- 🥗 Well Fed - Fiscal policy is often confused with monetary policy, but they're not the same. Monetary policy is when central banks (AKA the Federal Reserve, AKA The Notorious F-E-D) manage the country's money supply. The US government controls fiscal policy, which is all about taxes and how money is spent. Fun fact: the Fed isn't involved in fiscal policy.
- 🧑🏽🏫History Lesson: You can thank British economist John Maynard Keynes for coming up with fiscal policy. The term hit the scene after the Great Depression and this bloke's ideas were the inspiration for the infamous New Deal.
- 🔃 What's The Damage? - Fiscal policies might impact your finances directly or indirectly. An example would be the government adjusting your current tax rate. Depending on the change, it might leave you with more or less money to spend and invest.
- 🌴💰Money Tree - Fiscal policy may mean more cash for you in the form of stimulus checks and government assistance programs. It can also give you an indirect boost when the overall economy gets boosted and everyone's happy again (wishful thinking).
🔥Bottom line: Whether you're a financial fitness freak or more of an economic couch surfer, fiscal policy has an effect on you. Government decisions can either pad your wallet or have you cursing out Uncle Sam. Either way, it literally pays to pay attention! Wanna learn more fun financial facts? Check out this article on the Consumer Price Index and impress your friends.
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