Fiscal Policy Flexibility - Competing political priorities

5 important questions on Fiscal Policy Flexibility - Competing political priorities

What limits adjustments in fiscal policy for governments?

Much of the budget is already committed to other objectives, constraining adjustments.

Why is national defense spending difficult to reduce?

Politically sensitive issues make national defense spending hard to cut.

What are examples of entitlements that are hard to reduce?

Pensions, Medicare, and income support are legally required and unpopular to cut.
  • Higher grades + faster learning
  • Never study anything twice
  • 100% sure, 100% understanding
Discover Study Smart

What does “fiscal space” refer to?

Less room exists for governments to change spending for stabilization purposes.

What does it mean that fiscal policy is constrained?

Large parts of the budget are already locked in, limiting fiscal policy adjustments.

The question on the page originate from the summary of the following study material:

  • A unique study and practice tool
  • Never study anything twice again
  • Get the grades you hope for
  • 100% sure, 100% understanding
Remember faster, study better. Scientifically proven.
Trustpilot Logo