Question

the government of balearic is concerned about a recession, so it decides to implement expansionary fiscal policy. how would this policy be depicted in an ad-as model? expansionary fiscal policy would shift the lras curve to the left. shift the lras curve to the left and the ad curve to the left. shift the ad curve to the right. shift the lras curve to the right and the ad curve to the right. shift the ad curve to the left.

Answer 1

The Balearic government decided to undertake an expansionary fiscal policy because it is worried about a recession. Fiscal expansion would cause the AD curve will move to the right.

What does the term "fiscal policy" mean?

The phrase "fiscal policy" refers to whether the government utilizes spending and taxing to affect the economy. Governments frequently utilize fiscal policy to encourage strong, lengthy growth and to reduce poverty. There are three forms of monetary and fiscal policy. They are balanced, expansionary, and contractionary, respectively.

Please provide some examples of fiscal policy.

In order to expand fiscal policy, the government typically cuts taxes while increasing spending. These two policies both seek to increase general demand while diminishing budget surpluses or increasing deficits.

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