Hello, I would like help with this assignment Thank you Fiscal PolicyAssume the economy is in stagflation where Y<Y* and P>P*. Demonstrate this graphically and explain.Assume the US Government, wants to decrease its deficit to do so they decide to increase taxes. Demonstrate and explain the effects of this policy on the economy. Does this make the economy stronger or weaker, explain?After part b. the government elects you as the new economic advisor, what policy would you recommend and why? What options would your present to the government? Assume your recommendation is accepted, now demonstrate and explain the effects on the economy.Demonstrate and explain the effects of your policy recommendation on the deficit and debt. Explain when it is a good time in the business cycle to increase taxes.

Fiscal policy is an important macroeconomic policy adopted by the central government to stimulate…

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Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter17: Federal Deficits, Surpluses, And The National Debt

Section: Chapter Questions

Problem 7SQP

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Fiscal Policy
1. Assume the economy is in stagflation where Y<Y* and P>P*. Demonstrate this graphically and explain.
2. Assume the US Government, wants to decrease its deficit to do so they decide to increase taxes. Demonstrate and explain the effects of this policy on the economy. Does this make the economy stronger or weaker, explain?
3. After part b. the government elects you as the new economic advisor, what policy would you recommend and why? What options would your present to the government? Assume your recommendation is accepted, now demonstrate and explain the effects on the economy.
4. Demonstrate and explain the effects of your policy recommendation on the deficit and debt. Explain when it is a good time in the business cycle to increase taxes.

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