Q11. For various reasons, fiscal policy changes automatically when output and employment fluctuate. a) Explain why tax revenue changes when the economy goes in the recession. b) Explain why government spending changes when the economy goes into a recession. c) If the government were to operate under a strict balanced-budget rule, what would it have to do in a recession? Would that make the recession more or less severe?

Q11. For various reasons, fiscal policy changes automatically when output and employment fluctuate. a) Explain why tax revenue changes when the economy goes in the recession. b) Explain why government spending changes when the economy goes into a recession. c) If the government were to operate under a strict balanced-budget rule, what would it have to do in a recession? Would that make the recession more or less severe?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter21: Fiscal Policy

Section: Chapter Questions

Problem 3SQP

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Similar questions

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