Question

What, exactly, is fiscal policy in reality? Roughly how much money did our federal government collect in tax revenue in 2019, and spend in 2019? How much money may our government take in in tax revenue in 2020, and spend, overall, in 2020? Why such a difference? What happened? Did anything unusual happen in 2020, in terms of the level of tax revenue collected and the level of government spending? 2. Do you approve of the government’s new emergency spending programs? Why or why not? 3. What are the various major government spending programs? Please list them and describe them—please take me through each one, one by one: roughly how much money is spent each year by each program? Why must spending in each program RISE over time? Independent of the emergency spending this year, roughly how much does government spending rise every year? 4. What was our annual (yearly) deficit for 2019? What IS a deficit, exactly? 5. WHAT IS THE ‘DEBT-DEFICIT CYCLE”, exactly? How does it work, exactly? Why do some economists call it “a ticking time bomb”?

Answer 1

Fiscal Policy-

fiscal policy is a part of monetory policy that is based on Keynes Theory. Bsically it is a part of financial management of government by which governments manage their income(Tax) and expenditure.

Government's Revenue and expenditure in 2019-

Total Revenue- $3.5 trillions

Revenue from Individual Income Tax - $1.8 trillions.

Total Ependiture-$4.4 trillions.

Government's Revenue and expenditure for 2020-

Total Revenue- $3.8 trillions

Revenue from Individual Income Tax - $1.93 trillions.

Total Ependiture-$4.79 trillions.

Resons of difference-

There are lot of reasons behind fysical deficit but there are 4 major reasons behind it. These are following as-

1. Military Expenses-USA is involved in war in Syria, Iraq, Libiya , Afganistan and expending billions of doller.

2. New Tax Policy-Government has redesign the tax policy. This new tax policy is come in force for boosting corporate finncial health and increase expenditure power of individuals.

3. Social Security-The social security of USA is the best quality in the world. Total population of USA is 310 millions so expenditure is very high compare to other developed nations.

4. Gobal Economic Slowdown-USA is the largest economy of the world and the home of world's large MNCs. so, global economic slowdown impact their earning.

But 2020 will the worst for USA like as 1929 great recession because of global Corona virus Pandemic. 90% of USA is locked in house all industry and markets are closed. There is no economic activity is in force.More than 1.3 millions people are suffuring (tested positive) from this decease and 80k people has been died because of corona virus. COVID-19 could cost the USA billions in medical expenses.It will drastically affect the government's revenue.

2.ANSWER-

I approve the government emergency spending and government should increase it also. COVID-19 is the current example that support my recommendation.

3. ANSWER-

There are two type of of spending. These are following as-

1.Mandatory Spending- Health, social security, medicare etc

2. Discretionary Spending-Defence,energy,education, housing and urban development etc

Both the spending are account for 90% of total government's total spending.

Annual deficit for 2019- $1 trillion.

4.ANSWER-

Meaning of Deficit- Defficit mean gap between income and expenditure. Fiscal deficit is difference between government's total revenue minus government tital expenditure.

5. ANSWER-

Debt Deficit Cycle-.Fiscal deficit indicate the government's expenditure is more than government's revenue. Government fill this gap by debt financing. The source of debt financing could be internal or external. Government raise money through selling of government securities or directing taking the loan from foreign country or WB or IMF.

It increase the load on government and increase deficit also with the time.

It is very harmful for the nations. Greece had became bankrupt because of it and other nations of Europe, Japan and USA facing the financial difficulty because of deficit.