Describe appropriate discretionary fiscal policy according to Keynesian economics to smooth out the business cycle.
What will be an ideal response?
The government should increase its spending and/or reduce taxes (run a deficit), or increase government spending and taxes by the same amount to combat a recession. The government should do just the opposite to combat inflation during an economic expansion.
Economics
You might also like to view...
Price-cap regulation not only motivates cost control, it can also motivate socially desirable pricing
Indicate whether the statement is true or false
Economics
A consumer has $100 per day to spend on product A, which has a unit price of $7, and product B, which has a unit price of $15. What is the slope of the budget line if good A is on the horizontal axis and good B is on the vertical axis?
A) -7/15 B) -7/100 C) -15/7 D) 7/15
Economics