What kind of economic gap will start to occur (inflationary or recessionary)? 2. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)? 3. What specific fiscal policy tools does the government have available, and how should these tools be utilized to maximize their effect in stabilizing the economy?
The economy of a hypothetical country has been stable for two or three years with very low
1. What kind of economic gap will start to occur (inflationary or recessionary)?
2. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)?
3. What specific fiscal policy tools does the government have available, and how should these tools be utilized to maximize their effect in stabilizing the economy?
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