Expansionary or Contradictionary

The American government manages the overall pace of economic activity and looks to sustain high employment levels and stability in prices. In order to achieve these goals the government uses Fiscal and Monetary policy. Fiscal policy is used to determine the appropriate level of spending and taxes, whereas monetary policy manages the supply of money in the economy. When the economy enters a recession, governments stimulate it with deficit spending, whereas during an economic growth governments control it with higher taxes to achieve a surplus. These policies are based on the concepts of British economist John Maynard Keynes (1883-1946). Consumers mainly influence fiscal policy by their spending habits. For instance, if they become concerned about the economy they will save more and spend less, which will result in less production, increase in unemployment level and an overall lower spending rate. In general, the power is held by the consumer. If we become more reasonable with our spending, saving and investing for the better, this would positively impact our economy. (Brooks)
During the past few years, the government of the United States has mostly been in an expansionary mode of fiscal policy. President Barack Obama signed the American Recovery and Reinvestment Act in year 2009, which provided lower taxes, loans and contracts and expanded rights. It was estimated that in 10 years time the legislation will increase the budget deficit of the United States by $787 billion. Research shows that the Recovery act maintained nearly 700 000 jobs in 2010. Taking in consideration president Obama took upon the office in one of the worst economic states after President Bush, he signed the Recovery Act almost immediately to bring back economic growth. In result, 6.35 million jobs were available for a period of 3 years and 3.5 million jobs by the end of last year. Had this act not been signed, the U.S. would have had 8.5 million jobs less and the rate of GDP would have been 6.5% lower than the current GDP. The Recovery and Reinvestment Act came in as a crucial support to the economy by lowering taxes for the 95% of the U.S citizens, providing direct relief to state governments and increasing unemployment insurance, health coverage and food assistance programs. It also provided construction projects, which in turn provided jobs for the Americans. (The White House, 2013)
In my opinion the economy is contractionary as there was an increase in surplus. Although, the US economy is stronger than it was 5 years ago, it is still in the process of recovery.

References
Brooks, C. (n.d.). Retrieved from http://www.businessnewsdaily.com/3484-fiscal-policy.html The White House. (2013). The recovery act. Retrieved from
http://www.whitehouse.gov/economy/jobs/recovery-act

References: Brooks, C. (n.d.). Retrieved from http://www.businessnewsdaily.com/3484-fiscal-policy.html The White House. (2013). The recovery act. Retrieved from http://www.whitehouse.gov/economy/jobs/recovery-act