Engaging the expansionary fiscal policy tools to address the country’s economy’s instability will result in higher budget deficits and an increase in its national debt. If the country reduces the tax rates, the government income will be substantially reduced as tax is among the significant income sources for a government. Therefore, the government will have an underfinanced budget and be forced to borrow money to finance its budget, hence an increase in the national debt. Similarly, if the country chooses to increase spending, a lot of money will be needed to fund the ongoing government projects. The finances available for the country to use will be insufficient, which will attract budgetary deficits and a consequent national debt increase to supplement the budget.
The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country’s products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What would be the likely impact on the government budget and national debt of the use of the fiscal policy tools?
Cite this page
References
Academic.Tips. (2022) 'The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What would be the likely impact on the government budget and national debt of the use of the fiscal policy tools'. 3 November.
Reference
Academic.Tips. (2022, November 3). The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What would be the likely impact on the government budget and national debt of the use of the fiscal policy tools? https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-2/
References
Academic.Tips. 2022. "The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What would be the likely impact on the government budget and national debt of the use of the fiscal policy tools?" November 3, 2022. https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-2/.
1. Academic.Tips. "The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What would be the likely impact on the government budget and national debt of the use of the fiscal policy tools?" November 3, 2022. https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-2/.
Bibliography
Academic.Tips. "The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What would be the likely impact on the government budget and national debt of the use of the fiscal policy tools?" November 3, 2022. https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-2/.
Work Cited
"The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What would be the likely impact on the government budget and national debt of the use of the fiscal policy tools?" Academic.Tips, 3 Nov. 2022, academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-2/.