Fiscal policy can help deal with stagflation, but it comes with some big challenges:
Inflation Worries: When the government spends more money, it might make inflation (the rise in prices) worse.
Budget Problems: Trying to boost the economy can lead to huge budget deficits, which means the government spends more than it brings in.
Political Pushback: People might not like it if the government raises taxes or cuts spending.
Even with these problems, certain fiscal measures can still help. For example, programs that provide support to struggling industries can encourage growth while also keeping inflation in check.
Fiscal policy can help deal with stagflation, but it comes with some big challenges:
Inflation Worries: When the government spends more money, it might make inflation (the rise in prices) worse.
Budget Problems: Trying to boost the economy can lead to huge budget deficits, which means the government spends more than it brings in.
Political Pushback: People might not like it if the government raises taxes or cuts spending.
Even with these problems, certain fiscal measures can still help. For example, programs that provide support to struggling industries can encourage growth while also keeping inflation in check.