Question

Explain the budgetary effects of intention to shift some measure of fiscal responsibility away from Washington and place more decision-making power in state capitals.

Answer 1

Fiscal responsibility employees are Government pursues the appropriate level of government spending and tax to:

• Maintain sustainable public finances.
• Ensure fiscal policy aids the optimal rate of economics growth.
• Maintain appreciate levels of public investment.

Fiscal policy can have important long run effect on the health of the economy, particularly through its impacts on national saving andvthe growth of productivity. National savings can be generated privately by household and business or publicly by government. Most important effect of fiscal policy on national savings has been through the direct government budget. When the government run deficit it siphons off private savings leaving less available for capital investment.With less capital investment,less new equipment is provided to workers ,and all else being equal, future' productivity growth rates and levels are lower.