Quote challenge #3

Hi! This is the last day of the 3 day quote challenge. I thank Abhishek for nominating  me. It has been such a pleasure! 🙂

Government’s view of economy could be summed up in a short phrases : If it moves, tax it. If it keeps moving,regulate it. And if it stops moving subsidize it. 

                           –Ronald Reagan 

I think this quote gives the whole idea of a fiscal policy. Every economy  wants to keep its growth at its potential. It is not a good sign, if the growth rate is too high or too low. To keep the economy away from inflationary and recessionary gap, the government follows restrictive and expansive fiscal policies. This means that, when the economy is growing to fast, more that its potential, government will try to cut down spending and increase taxes. Similarly, when the economy is growing below its potential, the government would want to increase spendings and cut down taxes. 

This is the general theory,  but in reality factors such as low unemployment rate, population growth, wage policies,  trade policies and the valuation of currency are taken into consideration.


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