Explain the aspects of expansionary and contractionary fiscal policy. During which phases of the business cycle would each be appropriate? Expansionary fiscal policy refers to (increases, decreases) in government spending or (increases, decreases) in taxes or both, so that the net effect on aggregate demand (AD) is an increase in net government spending (G). Contractionary fiscal policy is the opposite: a(n) (increase, decrease) in government spending or (increase, decrease) in taxes or both, so that the net effect on aggregate demand is a decrease in net government spending. Expansionary policy would most likely be used during a r_ or (peak, trough) phase. A contractionary policy would most likely be employed near the (peak, trough) of the business cycle as the economy reaches full-employment GDP and the potential for inflation accelerates.

Explain the aspects of expansionary and contractionary fiscal policy. During which phases of the business cycle would each be appropriate? Expansionary fiscal policy refers to (increases, decreases) in government spending or (increases, decreases) in taxes or both, so that the net effect on aggregate demand (AD) is an increase in net government spending (G). Contractionary fiscal policy is the opposite: a(n) (increase, decrease) in government spending or (increase, decrease) in taxes or both, so that the net effect on aggregate demand is a decrease in net government spending. Expansionary policy would most likely be used during a r_ or (peak, trough) phase. A contractionary policy would most likely be employed near the (peak, trough) of the business cycle as the economy reaches full-employment GDP and the potential for inflation accelerates.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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