The answer to each question should be a short to long paragraph.
1) What are the advantages and disadvantages of using an expansionary monetary policy in a recession compared to using fiscal policy? (Please note: I am not asking you how monetary policy works. You have already answered it in part c above. The question is specifically about the advantages of monetary policy compared fiscal policy in a recession).
2) What are the advantages and disadvantages of using an expansionary fiscal policy in a recession (That is, compared to using monetary policy)?
The answer to each question should be a short to long paragraph.
1) What are the advantages and disadvantages of using an expansionary monetary policy in a recession compared to using fiscal policy? (Please note: I am not asking you how monetary policy works. You have already answered it in part c above. The question is specifically about the advantages of monetary policy compared fiscal policy in a recession).
2) What are the advantages and disadvantages of using an expansionary fiscal policy in a recession (That is, compared to using monetary policy)?
Related textbook solutions
Related questions
Which of the following statement(s) about fiscal policy is/are true?
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A fiscal policy action to close a recessionary gap is to decrease taxes |
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Fiscal policy may require time before it takes effect (lags) |
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Expansionary fiscal policy can be achieved by increases in transfer payments and decreasing government purchases to pay for it. |
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One potential problem with using fiscal policy to close recessionary output gaps is that sustained government deficits can be harmful to long-run economic growth. |
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Fiscal policy may affect potential output as well as potential spending. |
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The choices of government spending have little effect on fiscal policy since government spending is tied directly to the business cycle through Y=C+I+G+NX. |
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A fiscal policy action to close an expansionary gap is to decrease government purchases |
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Balanced budget fiscal policy is more effective than borrowing or re-paying government debt. |
