if the government implements an expansionary fiscal policy, how will real gdp and the price level be affected in the short run?

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05-12-2022
Business

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if the government implements an expansionary fiscal policy, how will real gdp and the price level be affected in the short run?

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AnkitaNagar AnkitaNagar · Answer 1 · 2022-12-11T08:14:59-05:00

If the government implements an expansionary fiscal policy Real GDP increases, price level and GDP rise.

How does expansionary fiscal policy affect price levels?

Expansionary fiscal policy measures include increased government spending, tax cuts, or increased government transfers. Doing any of these would increase aggregate demand, leading to more output, more employment, and higher price levels.

What happens when governments implement expansionary fiscal policies?

But expansionary fiscal policies, especially when applied during healthy economic can result in These side effects of expansionary fiscal policy tend to partially offset its stimulatory effect.

What will expansionary policies do to real GDP?

Increased money supply - increased consumption and greater economic growth. Expansion policies increase the availability of funds, which leads to increased consumption and economic growth.

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How does expansionary fiscal policy affect price levels?

What happens when governments implement expansionary fiscal policies?

What will expansionary policies do to real GDP?

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