Answered: This exercise points to a clear policy…

This exercise points to a clear policy dilemma. A fiscal contraction may have desirable long-run effect on output and living standards, but the short-run effects are output and gap.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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This exercise points to a clear policy dilemma. A fiscal contraction may have desirable long-run effect
on output and living standards, but the short-run effects are
output and
gap.

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