Golden Rule (fiscal policy)
The golden rule of fiscal policy is like a rule that grown-ups follow when they are trying to decide how much money they want to spend or save. It is basically the idea that you should try to balance your spending and saving in a way that keeps things stable and sustainable in the long run.
Imagine you have a piggy bank where you like to save your money. If you want to follow the golden rule, you wouldn't want to spend all your money right away, because then you wouldn't have anything left for later. But you also wouldn't want to save all your money either, because then you wouldn't be able to buy the things you need or want right now.
Instead, you would try to find a balance between spending and saving that lets you enjoy things in the short term while also making sure you have enough saved up for later. You might set a goal for how much you want to save, and then make a plan for how much you can afford to spend without going over your limit.
The golden rule of fiscal policy is kind of like that, but on a bigger scale. It is a rule that governments try to follow when they are making decisions about how to spend and save their money. They want to make sure they have enough resources to provide for their citizens now, while also making sure they don't run out of money or go into debt in the future.
This means that governments might set limits on how much they spend or borrow, and they might also try to build up a savings account or rainy-day fund that they can use in case of emergencies. By following the golden rule of fiscal policy, governments hope to create a stable and sustainable financial future for themselves and their citizens.
Imagine you have a piggy bank where you like to save your money. If you want to follow the golden rule, you wouldn't want to spend all your money right away, because then you wouldn't have anything left for later. But you also wouldn't want to save all your money either, because then you wouldn't be able to buy the things you need or want right now.
Instead, you would try to find a balance between spending and saving that lets you enjoy things in the short term while also making sure you have enough saved up for later. You might set a goal for how much you want to save, and then make a plan for how much you can afford to spend without going over your limit.
The golden rule of fiscal policy is kind of like that, but on a bigger scale. It is a rule that governments try to follow when they are making decisions about how to spend and save their money. They want to make sure they have enough resources to provide for their citizens now, while also making sure they don't run out of money or go into debt in the future.
This means that governments might set limits on how much they spend or borrow, and they might also try to build up a savings account or rainy-day fund that they can use in case of emergencies. By following the golden rule of fiscal policy, governments hope to create a stable and sustainable financial future for themselves and their citizens.