Active policy proponents: The economy is inherently unstable and believe that government can manage aggregate demand to offset inherent instability.

Critics of active policy: There is a time lag in the impact of policy on the economy, and our ability to predict future economic conditions is poor, so efforts to stabilize the economy may end up destabilizing the economy.

Supporters of increased government spending: Since reduced tax revenues are likely to be used for savings rather than spending, direct government spending can increase aggregate demand more, which is key to boosting production and employment.

Critics of increasing government spending: Tax cuts can expand both aggregate demand and aggregate supply, and rapid increases in government spending can lead to wasteful public projects.

Supporters of monetary policy rules: discretionary policy suffers from incompetence, abuse of power and policy inconsistency.

Critics of monetary policy rules: Discretionary policy is more flexible in responding to changing economic conditions.

Zero Inflation Target Supporters: Inflation has many costs and few if any benefits. Moreover, the cost of eliminating inflation—lowering output and employment—is only temporary. Even this cost could be reduced if the central bank announced a credible plan to reduce inflation, thereby directly lowering inflation expectations.

Critics of the zero-inflation target: Mild inflation imposes only small costs on society, while the recession necessary to lower inflation is costly.

Balanced Government Budget Supporters: Budget deficits place an unfair burden on future generations by raising taxes and reducing their incomes.

Critics of balanced government budgets: Deficits are only a small part of fiscal policy. Focusing only on budget deficits ignores many aspects. Fiscal policies, including various spending plans, can affect the interests of generations.

Tax Incentives Savings Supporters: Our society uses many methods to discourage saving, such as heavy taxes on capital gains and reductions in benefits for those who have accumulated wealth. They support changing tax laws to encourage savings, such as changing income tax to a consumption tax.

Tax-Incentive Savings Critics: Many changes to incentivize savings primarily benefit the wealthy, who do not need tax cuts. They also believe that this change will have only a minor impact on private saving. Increasing public saving by reducing government budget deficits could provide a more direct and egalitarian means of increasing national saving.