Question
Macroeconomics. Now consider country B which has No credit constraint at all, and a recession hits both countries (A and B). A countercyclical fiscal and
Macroeconomics.
Now consider country B which has No credit constraint at all, and a recession hits both countries (A and B). A countercyclical fiscal and monetary policies implemented by their ministry of finance and their Central bank. In your view, in which of these countries (A or B) implemented policies are more effective? And why? You could support your view by academic citation. (20). Country A has credit constrained households.
would i be safe to assume that this question is asking me to look at how fiscal policy and monetary policy affect both credit constrained and non-credit constrained households. so if fiscal policy is used to increase spending and reduce tax, it isn't as effective because if people cant borrow then they are less inclined to spend their money, so the policy wouldn't work so well. and with monetary policy the use of cutting interest rates would have little to no effect, because no one in the economy can borrow. so the more effective policies are in the non-credit constrained households.
is this an accurate way to look at the question cuz ive been struggling with this for 3 days whit no help from my actual lecturers
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