Exercise 4 Chapter 18 How would you expect larger budget deficits to affect private sector investment in physical capital? Why? What are some ways fiscal policy might encourage economic growth? What are some fiscal policies that might: 1. Improve human capital 2. Improve technology Chapter 19 What are some of the ways of comparing the standard of living in countries around the world? Why do you think it is difficult for high-income countries to achieve high growth rates? Graphing Question Explain what will happen in a nation that tries to solve a structural unemployment problem using expansionary monetary and fiscal policy. Draw one AD/AS diagram, based on the Keynesian model, for what the nation hopes will happen