The US corporate sector cuts spending sharply due to expectations of low future sales and tight...

The US corporate sector cuts spending sharply due to expectations of low future sales and tight financial conditions. Use (appropriate variants of ) the DD–AA diagram to study the following scenarios related to this shock, in terms of US real activity (GDP) and the nominal exchange rate.

Design a fiscal policy response, aimed at restoring full employment. What fiscal policy instrument would your plan use?

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P.No.4 Date MON TUE WED THU FRI SAT SUN O or q Combination of the two ii) Taxation policy : The structure of Tax rates has to be varied in the Context of Conditions prevailing in economy. iii) Public Expenditure: Public expen- dituce can be used to stimulate Production, income and employment Government expenditure for mx a highly significant part of the total expenditure in the econom. iu> Public Debt: A Sound programme of public borrowing and debt tebay- ment is a potent weapon to fight inflation and deflation.

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Rahul Sunny answered 1 year ago

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