Chapter 24, Problem 5P

To determine

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

To determine

(b)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(c)

To explain:

The result in long-term if no fiscal policy is applied.

To determine

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

To determine

(e)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(f)

To explain:

The result in long-term if no fiscal policy is applied.