Government Involvement With The Economic Cycle

It is part of the job of central bankers and treasury officials to manage cycles.

One of the primary concerns of the central bank is to manage and control inflation.

Central bankers have dual-responsibilities that are in opposition to each other:

1.Limit Inflation: which requires restraining the growth of the economy.
2.Support Employment: which calls for stimulating economic growth.

Governments:

When governments want to stimulate their country’s economy, they can:

1.Cut Taxes
2.Increase Government Spending
3.Distribute Stimulus Checks

When governments want to slow their country’s economy, they can:

1.Increase Taxes
2.Decrease Government Spending