The crowding-out effect limits investment in the private sector. The crowding-out effect occurs when the government runs a deficit and must borrow money from the loanable funds market. By borrowing money, they decrease the amount of savings available in the market and the real interest rate rises. The increase in the real interest rate lowers investment by businesses.
is a policy that have no demand
Expansionary fiscal policy is so named because it is designed to expand real GDP.
increase gvt exp
when it is weak
Counteracts the inflationary effect of the deficit in the operation balance
is a policy that have no demand
Expansionary fiscal policy is an increase in government spending or a reducing in net taxes which increase aggregate output/income (Y). +G or -T = +Y
Expansionary fiscal policy is so named because it is designed to expand real GDP.
increase gvt exp
expansionary fiscal policy position
when it is weak
cutting taxes
Counteracts the inflationary effect of the deficit in the operation balance
expansionary fiscal policy position
expansionary fiscal policy position
More public expenditure
high inflation