a. The Covid-19 pandemic has signifigantly effect the economy around the world and the suitable policy to be implemented is expansionary fiscal policy. Suppose the government is focusing more on tax component instead of the other components. Explain in details how tax can impact both aggregate demand and aggregate supply in this situation. Give an example of each. b. If actual employment is lesser than full employment, what fiscal policy actions could eliminate the gap? Is there any possible new problem will occur with the policy taken by the government to eliminate the gap? Illustrate and explain what adjustments, if any, take place?

a. The Covid-19 pandemic has signifigantly effect the economy around the world and the suitable policy to be implemented is expansionary fiscal policy. Suppose the government is focusing more on tax component instead of the other components. Explain in details how tax can impact both aggregate demand and aggregate supply in this situation. Give an example of each. b. If actual employment is lesser than full employment, what fiscal policy actions could eliminate the gap? Is there any possible new problem will occur with the policy taken by the government to eliminate the gap? Illustrate and explain what adjustments, if any, take place?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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