10. According to Buchanan and Wagner, why is there a political bias toward expansionary fiscal policy and not contractionary fiscal policy?
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A political commentator argues: "Congress and the President are more likely to enact an expansionary fiscal policy than a contractionary fiscal policy because expansionary policies are popular and contractionary policies are unpopular". Explain whether you agree or disagree. Please use your words.
What kind of stabilization policy is normally employed when the economy is in a recession?
Expansionary fiscal policy
Expansionary monetary policy
Contractionary fiscal policy
Answer the following key problem from the chapter on Fiscal Policy, which is based on our discussion in class:
a. Explain the problem of time lags in enacting and applying fiscal policy.
b. What is the difference between the national debt and a budget deficit?
c. How does the crowding-out effect relate to fiscal policy?
d. What is the difference between expansionary and contractionary fiscal policy?
e. During the 2012 election year, how did President Obama create a political business cycle?