Explain how financial crowding out can reduce the effectiveness of fiscal policy. What determines the magnitude of crowding out?
Answer to relevant QuestionsWhat determines the shape of the IS and LM curves?What are the problems of relying on automatic fiscal stabilisers to ensure a stable economy at full employment?What is Good hart’s law? How is it relevant to(a) Monetary policy; (b) Using assignment grades to assess a student’s ability; (c) Paying workers according to the amount of output they produce;(d) Awarding local authority ...What implications would a vertical short-run aggregate supply curve have for the effects of demand management policy?Under what circumstances would a higher rate of investment lead to a higher rate of economic growth?
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