The country of Tanne is entering a recession and is debating a stimulus package

Question

The country of Tanne is entering a recession and is debating a stimulus package of tax cuts and increased government spending to counter it. Advocates of the package contend that the situation in Tanne makes countercyclical fiscal policy appropriate, while opponents daim the opposite. For each of the following characteristics of Tanne, indicate whether it supports arguments for the stimulus or against the stimulus. Residents of Tanne anticipate the implications of higher government debt when they choose how much of their current income to spend. Supports arguments for the stimulus Supports arguments against the stimulus Tanne has a very large backlog of pre-planned, unbuilt, and important infrastructure projects. Supports arguments against the stimulus Supports arguments for the stimulus

Explanation / Answer

Ans. (1) It supports arguement for the stimulus, as they are concerned with the debt the government will have to bear after spending or cutting taxes.

(2) Supports arguement against the stimulus, as this shows that the country really needs to invest in the areas mentioned in the questions and this requires high government expenditure. IF government spends extra for stimulus, this would raise further government debt.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.