V im

Question 1

Benefits of fiscal policy?

Answer 1

Fiscal policy can boost C+I+G
Shift Ad Right
Shift LRAS Right

Question 2

Disadvantages of fiscal policy?

Answer 2

Demand pull inflationary pressure
Time lag
Increase in budget deficit (Unemployment falls to counter this as increase government revenue from this)
burden on future generations

Question 3

Evaluation of fiscal policy?

Answer 3

Size of the multiplier will be determine the effectiveness
Length of the time lag
As economy has a negative output gap, greater effective there will be on growth and unemployment.

Question 4

What can monetary supply do?

Answer 4

Interest rates
Money supply
Exchange rates

Question 5

Interest rates fall what happens?

Answer 5

Exchange rate falls- talk about benefits weak imports strong exports.
Investment increases capital goods more purchased. LRAS RIGHT
Savings discouraged
Borrowing encouarged
C+I-(X-M) ALL affected

Question 6

What are the negatives of reducing interest rates?

Answer 6

Time lag (Transmission mechanism 18months) 
Demand pull inflation

Question 7

Conclusion points of monetary policy?

Answer 7

Both depend on reccession so big growth
Level of consumer confidence
Both multiplier

Question 8

So conclusion for both?

Answer 8

Both multiplier,
Both depend on economic position.
Fiscal time lag length
Monetary level of consumer confidence.