Question: Please answer both of them, 7) Explain in words the crowding out effect of a permanent change in fiscal policy on output. 8) Explain in

Please answer both of them,

7) Explain in words the crowding out effect of a permanent change in fiscal policy on output. 8) Explain in words the inflationary bias regarding the practical difficulties of policies to maintain full employment.

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Crowding Out Effect 1 Explanation When theres a permanent increase in government spending financed by borrowing it can lead to higher demand for funds in financial markets This increased demand can pu... View full answer

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