Austerity Flashcards
What is austerity?
Government policies aimed to reduce public sector debt
Government policies aimed to reduce public sector debt
What is austerity?
What happens if there’s uncontrolled increase in country’s public debt?
Increases financial instability and can cause a recession
Increases financial instability and can cause a recession
What happens if there’s uncontrolled increase in country’s public debt?
Problem with austerity
Increases unemployment
Increases unemployment
Problem with austerity
Increase in taxes during austerity
Use additional tax revenue to reduce its debt. Increase direct/indirect taxes
Use additional tax revenue to reduce its debt. Increase direct/indirect taxes
Increase in taxes during austerity
Why reduction in government spending?
It can lower the level of government debt
It can lower the level of government debt
Why reduction in government spending?
Keynesian view of anti-austerity
An economy could spend its way out of a recession
An economy could spend its way out of a recession
Keynesian view of anti-austerity
Ideal anti-austerity measures
Increase employment which increases aggregate demand
Increase employment which increases aggregate demand
Ideal anti-austerity measures
