Suppose that Techoland and Cornsylvania decide to engage in fiscal federalism and adopt a common fiscal budget.

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a. Show, again using the AD/AS model, how fiscal policy can be used to alleviate the short-run fluctuations generated by the asymmetric demand shock.

b. Given the typical lags in the implementation of fiscal policy, would you advise the use of federal fiscal policy to alleviate short-run macroeconomic fluctuations?

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Economics

ISBN: 9781473768543

5th Edition

Authors: Gregory Mankiw, Mark P. Taylor

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Question Posted: Apr 26, 2024 02:01 AM

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Suppose that Techoland and Cornsylvania decide to engage in fiscal federalism and adopt a common fiscal budget.

Question:

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Economics

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