If the Fed slows the economy and keeps people from getting jobs, we will face larger budget deficits. This is about as straightforward as it gets. When the unemployment rate falls, more people have jobs and are paying taxes to the government. Also when people are working, they are less likely to be getting benefits like unemployment insurance and food stamps. Therefore as we get to lower levels of unemployment, the deficit gets smaller.
Posted on: Tue, 09 Sep 2014 15:10:40 +0000
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