Answer :
According to the new classical critique of fiscal policy, savings growth more than offsets increases in government spending and tax reductions.
Because they are based on irrational assumptions, critics of modern classical macroeconomics do not accept their policy consequences. According to research by economists like Phillips, Taylor, and Fischer, monetary policy is effective in the short run when wages and prices are not entirely flexible. This would imply that at the very least, rate reductions made financial sense. A budget is unavoidably created when expansionary fiscal policy is employed during economic downturns. Imagine that in response to the downturn, the government raises spending by $250 billion while maintaining the same tax rates.
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