What is Austerity?

Readers Question: What is Austerity? Simple Definition of Austerity Austerity involves policies to reduce government spending and or higher taxes in order to try and reduce government budget deficits. Austerity policies are often associated with higher unemployment and lower economic growth. More Complex Points and definitions of Austerity The term austerity is more likely to be used when government spending cuts and higher taxes occur during a recession or period of very weak economic growth. Austerity implies that spending cuts and tax increases are highly likely to have an adverse impact on aggregate demand…