Question 36 (1) Using IS/LM curves diagram explain the likely effects of a fiscal expansion financed by government borrowing on both the domestic interest rate and the level of economic activity. (ii) Explain what is the national debt and why keeping the national debt down as a percentage of GDP can be a good thing. (iii) Explain the term crowding out and why it is important when examining the effects of fiscal policy.

Question 36 (1) Using IS/LM curves diagram explain the likely effects of a fiscal expansion financed by government borrowing on both the domestic interest rate and the level of economic activity. (ii) Explain what is the national debt and why keeping the national debt down as a percentage of GDP can be a good thing. (iii) Explain the term crowding out and why it is important when examining the effects of fiscal policy.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter30: Government Budgets And Fiscal Policy

Section: Chapter Questions

Problem 38CTQ: Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending...

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