The budget keep spending and the government is about to give 7% pay rise to people who spend. This is the inflation spiral everyone talks about. You give pay rise to people who spend to create more inflation. Everyone ends up being worse off. It is just bad policy
Exactly.
When fiscal policy is stimulative in a capacity constrained economy, prices for goods and services have to rise for the market to clear.
Fiscal policy pulls in the opposite direction to monetary policy. They teach that stuff in first-year economics.
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