Macroeconomic

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Macroeconomics
Fiscal stimulus is where the state increases its public spending or cutting down on the taxes charged, all this with the aim of stimulating the economic growth of a country. It can be achieved for example when the government increases or adds liquidity to the current market by buying bonds via the federal reserve. It can also be through the offering of business bailout packages to the various business types. President-elect Donald Trump indicates the fiscal stimulus will be oriented in boosting the infrastructure of the country and increase the wages and also the number of jobs (Schwartz). This combined with the cutting down of taxes promised by Trump will affect the deficit and also the amount of money spent by the Country.
The spending of around 550 billion dollars on infrastructure will forecast or estimate to a debt averaging at 5 trillion US dollars. Trump is planning to get money to pay for the projects through and infrastructure fund that will enable the raising of enough money in deficit to build the American economy. The government will raise funds from government bonds that will be repaid back to the citizens or the people within a particular period after their maturity (Timiraos). The issue is that the deficit will keep widening despite the fact that the current situation has proved to be somewhat efficient because of the gradual decline in the rate of unemployment. Private investors and citizens are to be critical in raising the money required to propel Donald Trump’s projects in the infrastructural sector and accompanied with lowering of interests.

The federal deficit has been doubling with every president in the office, and with the President-elect nothing changes, the deficit in the federal reserve will soar, and it will be even steeper this time round (Schwartz). Trump believes on increasing the borrowing by the government which will add to the existing debt will enable the departure of economic growth. This increase that will be accompanied by a decrease in the interest rates and tax cuts will trigger the economic growth that has been stagnant in the recent past. The growth will in turn increase development and with development the government will inevitably see a rise in tax revenues and returns. By reducing the taxes in the US many citizens who had invested outside the country will repatriate their profits and this will consequently promote the income to the country. By analyzing these factors, the short-term debt will ensure long term benefits and the government will be able to pay the deficit from the growing economy ultimately.
In conclusion, the fiscal stimulus to be implemented by the President- elect will have both short term and long term outcomes. The most notable short-term result is the increase in the country’s gross domestic product (GDP), this not necessarily means the economy is working properly (Timiraos). The GDP increase will be due to the increase in the number of jobs for the people this will, therefore, be accompanied with better wages and thus increasing the living standards for the people. Regarding long-term outcomes, they are dependent on the returns or the impact of the spending, of the infrastructural sector will not be successful regarding stimulating the growth of the economy, there would be inflation and maxing out on the deficit. But in case the borrowing pans out, and the economy grows the government will be able to pay the debts ultimately and also benefit from the now expanding economy.
Works Cited
Schwartz, Nelson. “Clinton? Trump? Either Way, Count On Deficit Spending To Rise”. Nytimes.com. N.p., 2016. Web. 18 Dec. 2016.
Timiraos, Nick. “Donald Trump Would Boost Debt More Than Hillary Clinton, Report Says.” WSJ. N.p., 2016. Web. 18 Dec. 2016.