Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 11, Problem 5CQ
To determine
Changes in fiscal policy and the problems related with timing.
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How would a Keynesian Economist use Fiscal Policy to fight a Recession? Please do not
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Economics: Private and Public Choice (MindTap Course List)
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- Can governments use expansionary fiscal policy or expansionary monetary to effectively fight recessions? Why or Why Not?arrow_forwardFrom a Keynesian point of view, which is more likely to cause a recession: aggregate demand or aggregate supply, and why?arrow_forwardAnalyze fiscal policy in order the generate macroeconomic stability. Which kind of economic measures do you recommend at the current economic situation which is characterized as a stagflation situation? (use graphs)arrow_forward
- Explain the difference between fiscal policy and monetary policy. What are some of the reasons these macroeconomic policies are used? Elaborate on reasons these policies are used.arrow_forwardExplain the difference between fiscal policy and monetary policy. What are some of the reasons these macroeconomic policies are used?arrow_forwardIdentify the various policy choices available when an economy experiences an inflationary or recessionary gap and discuss some of the pros and cons that make these choices controversial.arrow_forward
- From 2008, how might monetary policy (as reflected in the OCR) have affected the degree of crowding out resulting from fiscal policy (as reflected in government expenditure)?arrow_forwardAssume the economy has entered a recession. Identify two fiscal and two monetary policy actions that could be used to alleviate the recession and explain how each policy would improve the economy.arrow_forwardAccording to Keynesian economics, what impact would a balanced budget amendment to the constitution requiring the federal government to balance its budget annually have on the economy?arrow_forward
- Why might “belt-tightening” by consumers in a recession be unwelcome?arrow_forwardKeynesian economics defends budget balance. However, according to economists, budget balance may exacerbate the effects of the business cycle. Isn't it also a Keynesian view to use discretionary policy to smoothen the business cycles? Aren't those two views contradictory?arrow_forwardA stimulative monetary or fiscal action should increase aggregate demand. What factors may limit the actual increase in aggregate demand?arrow_forward
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