2. The graph below shows the AD-AS diagram for Canada.1200+1100+1000AD900 -800700+600+50KRAS400300+200100+TRAS100 200 300 400508 600 700 800 9001000I 10' 20Real GDPWhat type of fiscal policy should the government of Canada be implementing to bring theeconomy to the long-run equilibrium (select one)?a. There is no need for either contractionary or expansionary fiscal policy.b. The government should implement expansionary fiscal policy.c. The government should implement contractionary fiscal policy.Price Level

The point at which aggregate demand and aggregate supply intersects is the point at which the actual…

2. The graph below shows the AD-AS diagram for Canada. 1200+ 1100+ 1000 AD 900 800 - 700+ 600 + 50KRAS 400 300- 200 - 100+ TRAS 100 200 30Q 400500 600 700 800 9001000I 100 20 Real GDP What type of fiscal policy should the government of Canada be implementing to economy to the long-run equilibrium (select one)? a. There is no need for either contractionary or expansionary fiscal policy. b. The government should implement expansionary fiscal policy. c. The government should implement contractionary fiscal policy. Price Level

2. The graph below shows the AD-AS diagram for Canada. 1200+ 1100+ 1000 AD 900 800 - 700+ 600 + 50KRAS 400 300- 200 - 100+ TRAS 100 200 30Q 400500 600 700 800 9001000I 100 20 Real GDP What type of fiscal policy should the government of Canada be implementing to economy to the long-run equilibrium (select one)? a. There is no need for either contractionary or expansionary fiscal policy. b. The government should implement expansionary fiscal policy. c. The government should implement contractionary fiscal policy. Price Level

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 1P

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Similar questions

What is the main advantage of automatic stabilizers over discretionary fiscal policy?
Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending by the University of Illinois is not fiscal policy? Why is a cut in the payroll tax fiscal policy whereas a cut in a state income tax is not fiscal policy?
What is the main reason for employing contractionary fiscal policy in a time of strong economic growth?
Explain how automatic stabilizers work, both on the taxation side and on the spending side, first in a situation where the economy is producing less than potential GDP and then in a situation where the economy Is producing more than potential GDP.
What are some of the ways fiscal policy might encourage economic growth?
Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below and sketch a diagram using aggregate demand and aggregate supply curves to illustrate your answer: A recession. A stock market collapse that hurts consumer and business confidence. Extremely rapid growth of exports. Rising inflation. A rise in the natural rate of unemployment. A rise in oil prices.
What is the main reason for employing expansionary fiscal policy during a recession?