Discussion Board 2
Discussion Questions:
Governments to get the economy out of recession or cool the economy down when the economy is overheating often use fiscal policy.
1. What is fiscal policy?
2. How can it be used to get the economy out of recession?
3. How can it be used to get the economy out of the situation where the economy is in an expansionary period where we exceed long run potential?
4. Do both situations result on different impacts on inflation? Why or why not?
Calculations:
3. The economy is experiencing a recessionary gap of $30 billion. If the MPC=0.75, what government spending stimulus would you recommend to move the economy back to full employment? If the MPC=0.66
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