Criminal Justice
Choose one of the three questions posed below and provide a 300-word minimum response. Please read the prompt carefully and make sure you address every part of it in your response.
Question 1:
What is fiscal policy? What effect does it have on the economy? What effect does the economy have on the budget? Why is it important to estimate likely levels of economic growth? Can you provide a case from your personal experience in which you have seen the effect of fiscal policy on the economy?
Question 2:
How is top-down budgeting different from bottom-up budgeting? Which of these methods is more widely accepted? What have been some of the attempts to reform bottom-up budgeting?
Question 3:
What is contracting out? Weigh the advantages and disadvantages of contracting out. Do you think that the advantages outweigh the disadvantages? When would contracting out NOT be advantageous?
ANSWER
Question 1: Fiscal Policy
What is fiscal policy?
Fiscal policy is the use of government tax and spending policies with the aim of influencing macroeconomic conditions like employment, inflation rates, demand, and economic growth (Chugunov & Pasichnyi, 2018).
What effect does it have on the economy?
Changes in government spending and adjustment of tax revenue can alter economic outcomes by increasing or decreasing economic activities. By altering aggregate demand via government spending changes and taxation fiscal policy influences employment and household income. This determines levels of investment and consumer spending in the economy (Chugunov & Pasichnyi, 2018).
What effect does the economy have on the budget?
The strength of the economy influences tax revenues available for the government budget. When the economy grows fast, the government revenue collections grow with it. This provides more tax revenue at the disposal of the government. The government can then increase its budget allocations and if possible, repay debts to achieve a balanced budget. Low economic growth means less tax revenue at the disposal of the government. This in turn reduces the amount of money available for budgeting (Cappers & Scheer, 2018). Low tax revenue can lead to budget deficits that can cripple government functionalities.
Why is it important to estimate likely levels of economic growth?
Estimating likely levels of economic growth enables the government to enact complementary fiscal policies that will guarantee a favorable economy for the country (Chugunov & Pasichnyi, 2018). Through growth predictions, the government can gauge the rate of taxation that will ensure a sustainable economy. It also determines the level of spending that the government can safely venture in to prevent deficits and impractical economic policies. It also helps the government to gauge whether it will require borrowing to facilitate its functions.
Can you provide a case from your personal experience in which you have seen the effect of fiscal policy on the economy?
Following the Great Recession of 2008, the federal government enacted the American Recovery and Reinvestment Act of 2009 (ARRA) (Cappers & Scheer, 2018). This was fiscal stimulus legislation that included federal government expenditures that countered the recession. The act provided $831billion in tax credits, unemployment benefits to families, and expenditure in education, healthcare, and infrastructure. My family received unemployment benefits from the package. This enabled us to increase our spending capacity and acquire some basic needs.
References.
Cappers, P., & Scheer, R. (2018). American recovery and reinvestment act of 2009: Final report on customer acceptance, retention, and response to time-based rates from consumer behavior studies (No. LBNL-1007279). Lawrence Berkeley National Lab.(LBNL), Berkeley, CA (United States).
Chugunov, I. Y., & Pasichnyi, M. D. (2018). Fiscal policy for economic development. Scientific bulletin of Polissia, 1(1 (13)), 54-61
