What is anti -cyclic fiscal policy?

Countercyclic fiscal policy is contrary to the current norm in the economy. For example, in a slow economy, anti -cyclic action should help encourage rise. It is a government effort that is carried out through taxes and various kinds of politicians. This type of policy can be administered for isolated situations or as an ongoing means of controlling the impact of business on the economy. These types of policies are known as automatic stabilizers. They are used to use the wealth generated in a strong economy and to mitigate the effect of the weak market so that the country does not fall into depression. The purpose of ongoing policies is also to help the economy avoid disturbing major changes in wealth. It can be used to try to prevent unevenness, which can cause problems, for example when inflationary pre -employment. The aim is to maintain a certain output, which is influenced by the growth of work, inflation and general health of the economy.

Factors that may affect the effectiveness of anti -cyclic fiscal policy include the timeliness, scope of policy and citizens' reaction. If policy is introduced too late, it can worsen the problem to be corrected. If fiscal policy is too dramatic or is not courageous enough, it can also destabilize the economy. In some cases, citizens may not respond as needed. For example, even if a significant tax refund may be determined to stimulate the economy, there is a risk that citizens who are not disturbed by a poor economy will save money rather than increasing expenditure.

A common type of ongoing anti -cyclic policy is progressive taxation. This is a system in which percensuration of income taxes increases with the increase in the economy. Increasing taxes tend to reduce demand, helping to ensure that the increase in prosperity is not too dramatic. This policy can be used on the entire population or people at a certain level of reception.

There are some who believe that PRoticyclic fiscal policy tends to risk the stability of the economy. These people are cautious about excessive government intervention in the economy. They feel that the supply and demand cycle provides adequate checks for a prosperous economy.