suppose that the economy enters a boom and becomes overheated. if the fed pursues countercyclical monetary policy but overreacts, this causes output in the short-run to go

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05-12-2022
Business

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suppose that the economy enters a boom and becomes overheated. if the fed pursues countercyclical monetary policy but overreacts, this causes output in the short-run to go

Sagot :

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Harshtsingh Harshtsingh · Answer 1 · 2022-12-27T02:26:33-05:00

Counter-cyclical fiscal coverage refers to the steps taken through the government that go towards the course of the monetary or commercial enterprise cycle.

Thus, in a recession or slowdown, the authorities increases expenditure and reduces taxes to create a demand that can force an economic boom.

Which of the following is an example of a counter-cyclical policy?

One example of an automatically countercyclical fiscal coverage is modern taxation. By taxing a large share of income when the economy expands, a revolutionary tax tends to reduce demand when the economy is booming, accordingly reining in the boom.

Counter-cyclical or defensive industries are those that do well in economic downturns, since demand for their products and services continue regardless of the economy.

Learn more about counter-cyclical policy here:

suppose that the economy enters a boom and becomes overheated. if the fed pursues countercyclical monetary policy but overreacts, this causes output in the short-run to go

Sagot :

Which of the following is an example of a counter-cyclical policy?

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