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    Fiscal policy and automatic stabilizers

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    What are the problems with fiscal policy?

    What are automatic stabilizers? What are some examples?

    What are your thoughts about the limits of fiscal policy?

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    Fiscal policy affects output directly though increasing consumption and government spending and indirectly through the tax and government spending multipliers. Increasing government spending requires either deficit spending or an increase in taxes, unless the government has a surplus. Deficit-financed government expenditures may "crowd out" private spending by competing for scarce resources and t private borrowing by raising ...

    Solution Summary

    limitations of fiscal policy and effects of automatic stabilizers