overheating economy

Related BrainMass Solutions

• Fiscal Policies during Recession and Economic Boom

  An overheating economy means that the resources of the economy cannot meet the demand of businesses. When the economy is booming and in danger of "overheating", these contractionary fiscal policies will help stabilize the economy: a.)

• The impact of rising interest rates.

  The impact of inflation on the economy and what measures should be undertaken to prevent the economy from overheating is always in the news.

• Inflation, stagflation, recession, depression and expansion

  As in all economies run by a price system, and just like machines, overheating in the economy occurs. In this case, economies in the world can prevent "overheating" in the economy by introducing monetary and fiscal policies.

• Role of Fiscal Policy in Business Cycles

  During peak level, the economy may experience overheating. This could be a threat since overheating, if not controlled, will result in a contraction of the economy.

• Automatic Fiscal Stabilizers

  The immediate increase in taxes helps to keep the economy from overheating. Best of luck on your assignment and thank you for using BrainMass. This solution discusses automatic fiscal stabilizers.

• The Federal Reserve System and the Money Supply

  Siphoning off excess money supply in the economy arrests inflation. This can only be done if the economy is overheating and the process of excess money in circulation could further deteriorate the economy.

• Discuss expansionary and contractionary monetary policies.

  When the economy is overheating as was the case in the late 1990's during the dot com boom the Fed pursued contractionary monetary policy, raising interest rates to encourage saving and reduced consumption and/or investment.

• International Monetary Fund

  Action is still needed to address the key issues facing the economy and the world's financial systems.

• Macro true and false

  To cool down an overheating economy the U.S. government decides to decrease income by 2000. If the mps is 0.2, the government should decrease its spending by: A) 400. B) 500.