Economics
Economics
4th Edition
ISBN: 9781464143847
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
Question
Book Icon
Chapter 28, Problem 1BCQ
To determine

Difference in Solana project reaction to that of other projects of the government such as roads and schools and valuate the fiscal stimulus project.

Concept Introduction:

Fiscal policy: It is a measure taken by the government to influence the economy of any nation. It is done by the government to adjust the spending level of the economy and also to influence the tax rate.

Expert Solution & Answer
Check Mark

Explanation of Solution

  • The S plant can produce power even when there is no sun because this plant collects heat when sun is present and stores the heat and finally converts it into electricity when it is required. This process is done with the help of mirrors.
  • With the rise in demand for electricity, the importance of plant is increasing, but the political reaction is unpleasant for this project as it is proved very difficult to invest in this project as many cities seems to be against the ones who provide loans.
  • The government subsidies and the government policies will tell whether the decision of setting the plant is valid or not. The investment on the road and school project is desired. Hence, this investment will be considered even if fiscal deficit is present.
  • Therefore, from the given case it can be concluded that the work, which is to be performed by S, is done in a very appropriate manner as it has generated employment.

Conclusion:

Thus, the political reaction is unpleasant for this project.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:9780190931919
Author:NEWNAN
Publisher:Oxford University Press
Text book image
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Text book image
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Text book image
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education