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Gross Domestic Product is also distorted by taxation, as every integrant component - consumption, investment, savings and net foreign position are deeply influenced, directly or indirectly, by level of taxes. A liberal fiscal policy, with lower taxes, encourages individuals and companies to develop and register important economic growth rates, but induces an increasing inflation rate.
Federal Policy
The Employment Act after World War 2 and the Full Employment and Balanced Growth Act made it a goal of the federal government to achieve full employment and price stability. According to economists and statisticians, the full employment figure is set at 3-4%, not at 0% unemployment as it could be believed. This 3-4% is also called normal unemployment rate, and is one of the desiderates that was put into practice following the World War II. However, especially in the U.S., price stabilization ideal has been realized to a great extent, maybe with the exception of oil crises when the prices fluctuated more than normally. If we consider...
statistics, he may conclude that U.S. had respected its promises and enabled the population to enjoy the benefits of price stabilisation and full employment.
Conclusions
Fiscal and Federal policies oriented toward strong employment and reduced inflation had been a central issue within the American political system. Democracy can perform accurately only in the conditions when the Government is supplied with necessary funds and revenues (fiscal policy) and when it can use the funds to develop social strategies that promote reduced unemployment and high price stability.
Bibliography
1) Bruce D. Meyer & Dan T. Rosenbaum, 1999. "
Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers,"
NBER Working Papers 7363, National Bureau of Economic Research, Inc.
2) Albert Rees, 1973. "
Compensating Wage Differentials,"
Working Papers 41.pdf, Princeton University, Department of Economics, Industrial Relations Section
Bibliography
1) Bruce D. Meyer & Dan T. Rosenbaum, 1999. "
Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers,"
NBER Working Papers 7363, National Bureau of Economic Research, Inc.
2) Albert Rees, 1973. "
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