Question

There has been a plethora of discussions concerning what couse(s) of action the federal government should take to: a) improve the economy, and b) decrease our national debt. For this discussion you need to take a good look at these issues and discuss how government policy can improve the economy and whether or not decreasing our national debt at this time will help or hurt our economy. And then answer this question: Can the government improve the economy and decrease our debt at the same time? If so, how? If not, why not?

Answer 1

In order to improve the economy, government needs to follow expansionary fiscal policy which involves increase in government expenditure and reduction in tax revenue. This increase in government expenditure involves taking loans from the market and other countries which adds to the national debt of the country. Thus, increase in government expenditure is needed. However, the best that the government can do is to invest in capital expenditure rater than revenue expenditure. This is because investment in capital expenditure like infrastructure leads to increase in debt but only in short run in the economy. In the long run, it will ultimately generate income for the government and reduce debt. Thus, it proves to be less burdensome for the future generations of the country.This is the best way the government can do to improve the economy and also decrease debt at the same time in the long run.