Response to: What the Best Fiscal Policy

For the past three years the unemployment rate determined from the website: http://research.stlouisfed.org/fred2/categories/10/downloaddata is 4.7 percent. This unemployment rate is good as it is below 5 percent meaning that the country's economy is growing. As long as this rate stays the way it has been for the years 2005, 2006, and 2007 the economy will continue to increase and prices will decrease and taxes will be low. If the unemployment rate increases then a expansionary fiscal policy will be in order because the economy is falling. If the unemployment stays the same or gets better there is no need for a policy because the economy is at a rate where it wants to stay so it can continue to rise.
The surplus for the past three years based on the data from the website: http://www.cbo.gov/. The surplus percentage for the years 2005, 2006, and 2007 as an average is 3.1 percent. This is good but not great as the economy is in need of more of a surplus. The policy that is in need is an expansionary policy because the economy needs to get up to 4 percent surplus by lowering taxes and increasing government spending. If this does not change by 2008 then the economy will drop but if there is an expansionary fiscal policy which will end up helping the economy. Demand will increase and production will increase causing there to be a new equilibrium.