Bundle: Exploring Macroeconomics, Loose-leaf Version, 7th + LMS Integrated MindTap Economics, 1 term (6 months) Printed Access Card
7th Edition
ISBN: 9781305784802
Author: Robert L. Sexton
Publisher: Cengage Learning
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Chapter 16, Problem 6P
To determine
To explain:
The meaning of a recessionary gap and the appropriate fiscal policy to combat or offsetone and inflationary gap and the appropriate fiscal policy to combat or offset one.
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Chapter 11 shows that increased government purchases, with taxes held constant, can eliminate a recessionary gap. How could a tax cut achieve the same result?
Q.3.2
Explain, using the AD-AS model, how the South African Government can use
fiscal policy as a tool to recover from the negative effects of this COVID-19
pandemic.
Your answer must include the following:
The description of the type of fiscal policy required;
An explanation of how the implementation of this tool will work their way
through the economy to achieve the desired effect;
The AD-AS graph showing the implications of your recommendations.
What is an expansionary gap? What fiscal policy might close that gap?
Chapter 16 Solutions
Bundle: Exploring Macroeconomics, Loose-leaf Version, 7th + LMS Integrated MindTap Economics, 1 term (6 months) Printed Access Card
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