Suppose the U.S. government creates a fiscal stimulus by sending people checks representing temporary tax cuts. a.
Question:
a. Explain and draw a graph to illustrate the effect of this fiscal stimulus payment on real GDP and the price level in the short run.
b. At which type of short-run equilibrium would the government want to use this policy?
c. Which macroeconomic school of thought would justify this policy?
d. If the government used this policy when the economy was at full employment, explain what would happen in the long run.e. Draw a graph to illustrate your answer to d.
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a The fiscal stimulus check increased households consumer expenditure The increase in consumption ex...View the full answer
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Related Book For
Macroeconomics Canada in the Global Environment
ISBN: 978-0321778109
8th edition
Authors: Michael Parkin, Robin Bade
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