12. For various reasons, fiscal policy changes automatically when output and employment fluctuate. a. Explain why tax

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12. For various reasons, fiscal policy changes automatically when output and employment fluctuate.

a. Explain why tax revenue changes when the economy goes into a recession.

b. Explain why government spending changes when the economy goes into a recession.

c. If the government was to operate under a strict balanced-budget rule, what would it have to do in a recession? Would that make the recession more or less severe?

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Principles Of Macroeconomics

ISBN: 9780176591977

7th Canadian Edition

Authors: N. Mankiw, Ronald Kneebone, Kenneth McKenzie

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