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The Dangers of Fiscal Policy
| Content Provider | WatchKnowLearn |
|---|---|
| Description | In the early 2000s, Argentina’s debt reached 150% of GDP, leading to what was the largest government default in the history of the world. But Argentina is not alone. Other countries before and since have also defaulted on their debts: Thailand, Indonesia, Mexico, and Greece, for instance. How does this happen? Why did these countries take on too much debt? And, importantly, how much is too much debt? There’s quite a bit of debate on this topic, which we discuss in this video on the dangers of fiscal policy. On one hand, government spending can give the economy a short-run boost. Most economists agree that fiscal policy is useful when many resources are underemployed due to an aggregate demand shock. There’s less agreement when it comes to using fiscal policy to combat shifts in aggregate supply, and less agreement still on the dangers of debt-financed fiscal policy. Debt-financed spending can accrue a lot of interest. More and more of the national budget will go towards interest payments alone. Not only that, but borrowing from other countries can lead to more uncertainty, risk, and even economic collapse...much like we saw in Argentina. |
| Language | English |
| Access Restriction | Open |
| Rights License | Educational Community License |
| Subject Keyword | k-12 homeschool Fiscal Policy homeschooling home school parents educational videos k12 preK-12 Social Sciences Economics and Business Economics Social Studies Economics Concepts Macroeconomics |
| Content Type | Video |
| Educational Role | Student Teacher |
| Educational Use | Self Learning Lecture |
| Time Required | PT6M2S |
| Education Level | Class XI Class IX Class XII Class X |
| Pedagogy | Lecture cum Demonstration |
| Resource Type | Video Lecture |
| Subject | Fiscal and Monetary Policy |
