MyLab Economics with Pearson eText -- Access Card -- for Economics
MyLab Economics with Pearson eText -- Access Card -- for Economics
7th Edition
ISBN: 9780134739403
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 27, Problem 27.6.9PA
To determine

Response of government budget in case of recession.

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Briefly explain how a budget deficit arises and what corresponding action is typically by taken by a government in this type of circumstance.
Briefly discuss the effects of time lags in relation to fiscal policy, including: a comparison to monetary policy, what the level of fiscal policy will be, and its effect on fiscal policy during recession.
Economist Arthur Laffer famously pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Why might this be the case? Did it happen following the tax cuts of 2017?
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