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Dacir
Internal balance
External balance
Pauline F. Dacir
superior to fixed exchange rates. Under fixed exchange rates, governments are not
usually free to employ monetary policy. Under floating rates, countries can use both.
What is 'fiscal deficit'
when total government spending equals (or is greater than) government tax
receipts.
Usually, governments have a political incentive to spend more money than
they actually have. This leads to a budget deficit because they need to
borrow from the private sector. However, if the government increase taxes
then they might be able to balance the budget.