Many advocates believe that a country’s fiscal policy may not always be judged on the basis whether its annual budget is being balanced or not. Many economists believe that a misbalanced budget may give rise to further growth and development in the country. However, the continuous increase in deficits and accumulating deficits could cause additional problems in countercyclical fiscal policies as it influences business cycle and they are associated with tax and spending laws. Many economists worry that it raises concerns of unemployment and inflation. As one of the immediate impacts of debts is on economy, it limits the government to use their fiscal policies. Moreover, the treasury department tries to compensate the debt in their ways, increasing the taxes and decreasing the services. Thus, under the above mentioned conditions there is increased inflation and there is economic upheaval in the country, it has a considerable amount of impact on fiscal policies.
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