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Chapter 13: Q3. (page 500)

Is the depth of a recession a good or a bad time to undertake an energy project? Why or why not?

Short Answer

Expert verified

The recession is a good time to take energy projects as it will increase the economy's aggregate demand.

Step by step solution

01

Explanation

A recession is a good time to undertake the energy project as it is a fiscal stimulus. During the recession, the economy is experiencing a downfall; thus, the expansionary fiscal policy will take the economy out of the recession. The expansionary fiscal policy will create jobs in the economy, increase income as well as consumption. Hence, the recession is a good time to undertake the energy project.

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Most popular questions from this chapter

How did the political reaction to government funding for the Solana project differ from the reaction to more conventional government spending projects such as roads and schools? What does the case tell us about how to assess the value of a fiscal stimulus project?

Explain why states required by their constitutions to balance their budgets are likely to experience more severe economic fluctuations than states not held to that requirement.

Explain how a contractionary fiscal policy like austerity can make it more likely that a government is unable to pay its debts.

Explain why a \(500 million increase in government purchases of goods and services will generate a larger rise in real GDP than a \)500 million increase in government transfers.

Explain why a \(500 million reduction in government purchases of goods and services will generate a larger fall in real GDP than a \)500 million reduction in government transfers.
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