(i) Using IS/LM diagram explain the likely effects of a fiscal expansion financed by government borrowing on both the domestic interest rate and the level of economic activity. (ii) Briefly explain what the national debt is and why keeping the national debt down as a nercentage of GDP can be a good thing.

(i) Using IS/LM diagram explain the likely effects of a fiscal expansion financed by government borrowing on both the domestic interest rate and the level of economic activity. (ii) Briefly explain what the national debt is and why keeping the national debt down as a nercentage of GDP can be a good thing.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter17: Stabilizing The National Economy

Section17.2: The Fiscal Policy Approach To Stabilization

Problem 1R

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