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Chapter 10: Macroeconomic objectives (page 196)

How can governments utilize fiscal policy?

Short Answer

Expert verified

It can be utilized as a demand management tool

Step by step solution

01

Macroeconomic objectives Fiscal Policy

Governments can use fiscal policy to promote:

providing public services redistributing wealth and income achieving environmental objectives promoting economic growth-regulating the economic business cycle

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Most popular questions from this chapter

In what direction will each of the following occurrences shift the consumption and saving schedules, other things equal?

  1. A large decrease in real estate values, including private homes.
  2. A sharp, sustained increase in stock prices.
  3. A 5-year increase in the minimum age for collecting Social Security benefits.
  4. An economywide expectation that a recession is over and that a robust expansion will occur.
  5. A substantial increase in household borrowing to finance auto purchases.

Why is investment spending unstable?

Why will a reduction in the real interest rate increase investment spending, other things equal?

What are the main macroeconomic policies used to achieve macroeconomic objectives?

If the MPS rises, then the MPC will

  1. fall.

  2. rise.

  3. stay the same.
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