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The Pros And Cons Of Austerity Policy

1354 Words6 Pages

Austerity policy is not good in the current situation, because it could cause revolution, increasing unemployment, decreasing GDP,export and government cannot afford money on education, so poor people became not to be able to go to school. I think austerity policy is for when country is in a good time, not recession. (Pettinger, 2013). Stimulus policy is much better than austerity policy though there is some problem. It leads to increase GDP, inflation, economic growth and decrease unemployment. But the country has no power in such a situation to run the stimulus policy, further if high inflation, high government spending and tax reduction, these three situations become stronger. It is impossible to run stimulus policy because a current deficit …show more content…

People cannot be given a good welfare because of cutting spends, but they have to pay high tax, who would agree with this policy. It seems to be able to fix a dramatic fall in government tax and dramatic rise in social spending, but it causes of revolution if it happened that economics will be worse than now and the worst thing for government is an approval rate must down. Especially, people who live in this country now are living in low tax and higher spending situation. How can they adopt austerity policies? Nobody will be able to do. E.g Thousands of people have taken part in a protest in central London against government …show more content…

Trading company must be profitable. Not only that, all the businesses produce lots of product and because of employment rate is higher, economics growth rapidly. To prevent saving money in a bank, the central bank conducts a monetary policy and low interest rate encourage people to spend more money. Fiscal policy is conducted too. As was When Government expenditure cut for trying to stop stagflation that causes of economic down turn in stagflation, it is important to stimulate the supply side for that company have to create a new effective machine and reduce cost of manufacturing then aggregate demand of other countries will up. However, a cost of manufacturing decreased, if another country doesn’t want to product or there is nicer price other countries product, unemployment doesn’t up. If could attract other country for new product, aggregate demand of other countries will be up, government should invest in R&D for that. Franklin Roosevelt promised a new deal for the American people. He stabilised the banking system. All banks under federal control. Although he can restore and staved off the collapse of the banking system, the problem of the unemployment was more difficult. But he did three

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