According to the Keynesian model, in what ways will expansionary fiscal policy stimulate aggregate demand?
The two components of expansionary fiscal policy are increased government spending and reduced taxes. Increased spending stimulates aggregate demand directly since government purchases are a component of aggregate demand. Reduced taxes also stimulate aggregate demand indirectly; lower income taxes stimulate consumption, and lower business taxes stimulate private investment.
Economics
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Explain the proposition known as Ricardian equivalence
What will be an ideal response?
Economics
Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $12; AVC = $10; MC = $15; MR = $13. The firm should
A) decrease output. B) increase output. C) increase price. D) change nothing.
Economics