Read the following premise carefully and answer the questions specifically and in detail. "In the face of unstable economic growth due to a recession or accelerated inflation, the potential problems of high public debt include increased income inequality, reduced economic incentives, and crowding out private investment."   A. Express in detail the effects of expansionary and contractionary fiscal policy on income and the price level. B. Using the premise presented as a basis, argue about the intervention of fiscal policy as an instrument to promote the growth, sustainability and economic stability of a country. (Gives an example in detail.)

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Read the following premise carefully and answer the questions specifically and in detail.

"In the face of unstable economic growth due to a recession or accelerated inflation, the potential problems of high public debt include increased income inequality, reduced economic incentives, and crowding out private investment."

  A. Express in detail the effects of expansionary and contractionary fiscal policy on income and the price level.

B. Using the premise presented as a basis, argue about the intervention of fiscal policy as an instrument to promote the growth, sustainability and economic stability of a country. (Gives an example in detail.)

Expert Solution
Step 1: Define key term

Fisacl Policy:

Fiscal policy refers to the use of government spending and taxation to influence the economy. It is ine of the tools that governments employ to achieve macroeconomic objectives, such as economic growth, employment, and price stability.

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