Us Balanced Economy

When looking at the U.S. economy and our fiscal policy, one will see that everyday our government and elected officials have to make decisions on which direction to proceed, with regard to obtaining a balanced economy. With this in mind, how do these individuals know which direction is the correct path and what are the factors that contribute to the final decisions? Today, an individual can turn on the news, read an article or listen to an interview from multiple economists around the country, explaining why their view of fiscal policy is correct and any other frame of thinking is just not right. There is a problem with taking just one side or another when it comes to fiscal policy, because of the different variables and/or factors that play a part in the final outcome. There are always multiple ways of looking at the economy and the path that should be followed.
First off, what is fiscal policy? Fiscal policy is the way in which the government manages the budget. In other words, the government collects revenue via taxation and spends this revenue on various programs in hope of stimulating the economy and creating economic growth. (US Economy, 2014) collects revenue via taxation that it then spends on various programs. When the government receives funding for the budget, they have to decide on the direction in which to proceed for the best outcome economically. Depending on whether the government’s goal is to stimulate or slow down the economy, elected government officials make decisions on raising taxes and cutting government spending, lowering taxes and increase government spending. This is the essence of fiscal policy.
There are two main types of fiscal policy approaches, expansion and contraction. Expansionary fiscal policy is utilized to increase aggregate demand and create economic growth. This process involves lowering taxes, increasing government spending or doing both in order to close recessionary gaps that exist in the economy.   (Library of...