(a) The hypothetical information in the following table shows what the situation will be in if the government of Singapore does not use fiscal policy: Year 2020 Real GDP Price Level 110.0 120.5 Potential GDP S$20.1 billion S$20.75 billion S$20.1 billion S$20.1 billion 2021 i. If the government of Singapore wants to keep its real GDP at its potential level in 2021, determine whether an expansionary or contractionary policy should be applied. ii. If government of Singapore is successful in keeping real GDP at its potential level in 2021. discuss what would happen to the level of real GDP. potential

(a) The hypothetical information in the following table shows what the situation will be in if the government of Singapore does not use fiscal policy: Year 2020 Real GDP Price Level 110.0 120.5 Potential GDP S$20.1 billion S$20.75 billion S$20.1 billion S$20.1 billion 2021 i. If the government of Singapore wants to keep its real GDP at its potential level in 2021, determine whether an expansionary or contractionary policy should be applied. ii. If government of Singapore is successful in keeping real GDP at its potential level in 2021. discuss what would happen to the level of real GDP. potential

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 1DQ

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