1) Describe the Keynesian prescription to cure a recessionary gap. 2) Describe the Keynesian prescription to...
1) Describe the Keynesian prescription to cure a
recessionary gap.
2) Describe the Keynesian prescription to cure an inflationary
gap.
3) What is the difference between discretionary & automatic fiscal policy?
4) Explain the difference between zero, incomplete, & complete crowding out. If crowding out is complete, does it call into question the effectiveness of a rise in government purchases in order to remove an economy from a recessionary gap?
Homework Answers
Ans
1 Keynes recommends expansionary fiscal policy to increase Aggregate demand in this case
2 Keynes recommends contractionary fiscal policy to decrease Aggregate demand in this case
3 Discretionary policy involves deliberately changing Govt expenditure and taxes according to situation of economy Whileas automatic policy involves designing such fiscal instruments which will automatically increase Govt expenditure and/or decrease taxes during depression to stimulate AD and decrease Govt expenditure and/or increase taxes during inflation to decrease AD
4 in zero case private investment doesn't fall at all. In partial private investment falls by less than increase in Govt expenditure In case of complete crowding out private investment falls by full amount of increase in Govt expenditure Yes it calls so because in that case AD doesn't rise at all from Govt action and there us no benefit of expansionary fiscal policy
Add Answer to:
1) Describe the Keynesian prescription to cure a
recessionary gap.
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Check my answers please ??
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Check my answers please ??
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UTION # FISCAL POLICY NAME the mix of government spending and taxing in order to balance the Fiscal policy is best defined as: uncontrolled government spending, altering the mix of govern budget every fiscal year. changes in govern macroeconomic goals. vernment spending and taxing for the purpose of achieving certain minimizing government expenditures over the fiscal year. , while reases in government spending and lower taxes represent decreases in government spending and higher taxe contractionary fiscal...
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