Banking Awareness / Financial Awareness For Bank Exam And Interview

What is meaning of "Fiscal" and What is meaning of "Cliff"

Towards the end of 2012 in USA, the Fiscal Cliff  terms is hotly discussed.   Fiscal Cliff here refers to the economic effects that could result from (a) tax increases,  (b) spending cuts and  (c) a corresponding reduction in the US Budget deficit beginning in 2013, if the existing laws are not changed by the end of 2012.

 Interestingly, there are number of scheduled measures in the US economy which are to take effect from beginning of January 2013.  If these measures are allowed to take place, the deficit in US budget (we know deficit is the difference between what the government takes and what is spends)  is likely to be reduced by almost half beginning the first days of 2013.  This kind of sudden fall in deficit in a short period of time is known as "fiscal cliff".

Bright Side of the Fiscal Cliff :

Certainly there are few who feel  Fiscal Cliff would  have a long-term positive impact.  These people argue  that the U.S. has to certainly tackle its deficits at some point of time.   It is better to bite the bullet at this stage and this initiative can prove a step the right direction.  Although the short-term impact could be severe (recession in 2013), the bullish argument would hold that the long-term gains (lower deficits, lower debt, better growth prospects, etc.,) would be worth the short-term pains.