Chapter 11: Problem 44
Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and long-term impacts of such policies on the economy?
Chapter 11: Problem 44
Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and long-term impacts of such policies on the economy?
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Get started for freeIf there is a recessionary gap of \(\$ 100\) billion, should the government increase spending by \(\$ 100\) billion to close the gap? Why? Why not?
What other changes in the economy can be evaluated by using the multiplier?
Explain what types of policies the federal government may have implemented to restore aggregate demand and the potential obstacles policymakers may have encountered.
What are some reasons that the economy might be in a recession, and what is the appropriate government action to alleviate the recession?
What should the government do to relieve inflationary pressures if the aggregate expenditure is greater than potential GDP?
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