(a)What are the potential problems with counter cyclical fiscal policy? (b)A balanced budget fiscal policy is pro-cyclical....
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Question:
(a)What are the potential problems with counter cyclical fiscal policy?
(b)"A balanced budget fiscal policy is pro-cyclical". Explain with economic
reasoning and appropriate diagram(s).
(c)"A fiscal policy of changing both the government spending and taxes by
the same amount is not neutral". Explain with a numerical example.
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