Fiscal policy has been processed in various types during capitalistic economy is generated and developed.
The Fiscal policy of absolute monarchy has devoted a primary accumulation of capital.
but when industrial capitalism was accomplished, national...
Fiscal policy has been processed in various types during capitalistic economy is generated and developed.
The Fiscal policy of absolute monarchy has devoted a primary accumulation of capital.
but when industrial capitalism was accomplished, national economy was self-adjusting developed without persanal interference.
In that times, classical economic theory premised full employment and credited say's law.
Therefore, whatever expenditures is non productive, especially, classical economists insisted on that public debt and tax hindered the accumulation of capital-laissez faire. but when it was arrived at the stage of monopolistic capitalism, price mechanism could not be solved the problem of business cycle, thus, capitalistic vision of J.M.Keynes expressed secular stagnation, so to speak , moreover the richer the community, the wider will ten to be the gap between its actual and its potential production and therefore the more obvious and outrageous the detects of the economic system.
Total employment depends on total demand, and unemployment results from a deficiency of total demand. as employment increases, income increases. A fundamental principle is that as the real income of a community increases, consumption will also increases but by less than income.
Therefore, in order to have sufficient demand to sustain an increase in employment, there must be an increase in real investment equal to the gap between in income and the consumption demand out of that income.
Hansen accepted keynes's thought. moreover, He asserted that governmental positive fiscal policy increase national income and achieve economic stability, especially, He proposed a systematically compensatory fiscal policy and lay stress upon a balancing factor-compensatory function.