Answer these question briefly. 1. The shortcomings of discretionary fiscal policy 2.The potential hazards of discretiona...
Answer these question briefly.
1. The shortcomings of discretionary fiscal policy
2.The potential hazards of discretionary monetary policy
3.The effects of monetary policy in one country on aggregate demand in another country
Homework Answers
1)
Discretionary Fiscal policy is deliberate change or maneuvering in expenditure and tax policies of government. Following shortcomings:
- Lag effects in fiscal policy can lead to undesirable outcomes or it might direct economy towards wrong direction.
- Discretionary fiscal policy are politically motivated, thus causes rise in inflation level of economy.
- Government deficit might rise and debt issue becomes more acute over long run.
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Answer these question briefly. 1. The shortcomings of discretionary fiscal policy 2.The potential hazards of discretiona...
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