Explore BrainMass
Share

Explore BrainMass

    fiscal policy, its limits, and its impact on the overall eco

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

    What's the fiscal policy? Which factors limit its effect ( i.e. crowding out, the impacts of financing government's spending) . Why you would advocate either expansionary or contractionary policy under recession, and growth. Please discribe your position on expansionary policy and Contractionary policy. If niether, why? Describe the intended impact of the policy on the consumer, business, and the economy overall.

    © BrainMass Inc. brainmass.com April 3, 2020, 7:23 pm ad1c9bdddf
    https://brainmass.com/economics/fiscal-policy/fiscal-policy-its-limits-and-its-impact-on-the-overall-eco-259854

    Solution Preview

    Graduate discussion on fiscal policy, its limits, and its impact on the overall economy.
    What's the fiscal policy?
    Fiscal policy refers to government action of increasing or decreasing its spending, and making changes in taxation to affect the economy.
    Which factors limit its effect ( i.e. crowding out, the impacts of financing government's spending)
    The factors that limit its effect are that when the government finances its spending with the issue of government bonds, there is an increase in the interest rates in the market. The government bonds increase the demand for credit and this prevents the private borrowers from getting access to funds. This is called the crowding out effect.
    The other limitation is that an increase in ...

    Solution Summary

    This explanation provides you a comprehensive argument relating to fiscal policy, its limits, and its impact on the overall economy

    $2.19

    ADVERTISEMENT