austerity economics

Austerity economics refers to policies aimed at reducing government deficits during periods of economic downturns. This is typically achieved by cutting public spending, increasing taxes, or both. The idea is that reducing government debt can restore confidence in the economy, encourage investment, and promote growth. However, austerity can also lead to reduced public services and economic hardship for individuals, sparking debate on its effectiveness. Critics argue that such measures can deepen recessions and hinder recovery, while supporters believe they are necessary for long-term financial stability. Balancing these outcomes is a key challenge for policymakers.