Question: 8. Explain the difference between active discretionary fiscal policy advocated by mainstream economists and passive fiscal policy advocated by new classical economists. Explain: The problem

8. Explain the difference between “active” discretionary fiscal policy advocated by mainstream economists and “passive”

fiscal policy advocated by new classical economists. Explain:

“The problem with a balanced-budget amendment is that it would, in a sense, require active fiscal policy—but in the wrong direction—as the economy slides into recession.”

LO19.3

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