Answered: Explain in detail fiscal policy, its…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 9P

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Read the following premise carefully and answer the questions specifically and in detail, you must answer the request with the correct information, showing that you understand and can properly apply the concepts. Try to address all the elements of each question and always express the answers in your own words.

"In the face of unstable economic growth due to a recession or accelerating inflation, potential problems with large public debt include higher income inequality, reduced economic incentives, and crowding out of private investment".
1. Explain in detail fiscal policy, its function and its effects on short and long-term economic fluctuations (uses the aggregate demand and supply model).

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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