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Questions and Answers
What is the likely impact of fiscal policy on the future course of the economy in the scenario provided?
Which of the following best describes a disadvantage of using fiscal policy as a short-run economic tool?
What does the economist's statement about fiscal deficits and tax cuts reflect?
In the scenario provided, what is the effect of Country A's large fiscal deficit on private sector investment?
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Which of the following is a potential drawback of using income tax cuts to stimulate GDP growth during a recession?
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Why might a country with an independent central bank choose an expansionary monetary policy over a discretionary fiscal policy during a recession?
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What effect can an extended period of GDP growth have on a country's budget balance?
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Which of the following is most likely to be considered a type of direct tax?
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What is the main limitation of fiscal policy in stabilizing aggregate demand?
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How does monetary policy differ from fiscal policy?
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Which advantage of using a specific fiscal policy tool is highlighted in the text?
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What is an advantage of automatic stabilizers over discretionary fiscal policy?
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