Explore BrainMass
Share

Explore BrainMass

    fiscal policy

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Can anyone help clarify? All I need are a couple of sentences to explain these questions.

    1. What is the final impact of contractionary fiscal policy on the price-level and real output?

    2. What is the final impact of expansionary fiscal policy on the price-level and real output?

    3. What are the impacts of an easy monetary policy on the price-level and real output? When would an easy monetary policy be appropriate?

    4. What are the impacts of a tight monetary policy on the price-level and real output? When would a tight monetary policy be appropriate?

    © BrainMass Inc. brainmass.com October 9, 2019, 9:20 pm ad1c9bdddf
    https://brainmass.com/economics/fiscal-policy/fiscal-policy-181403

    Solution Preview

    Dear Student,

    1. Contractionary fiscal policy occurs when net government spending is reduced either through higher taxation revenue or reduced government spending or a combination of the two. This would lead to a lower budget deficit or a larger surplus than the government previously had, or a surplus if the government previously had a balanced budget. Contractionary fiscal policy is usually associated with a surplus. During periods of high economic growth, a budget surplus can be used to decrease activity in the economy. A budget surplus will be implemented in the economy if inflation is high, in order to achieve the ...

    Solution Summary

    Types of fiscal policy are denoted.

    $2.19