This is a discussion post for microeconomics. Please answer in a question/ answer format.
Please use sources that can be verified.
DQ-4: Fiscal Policy
Congratulations! You have been appointed an economic policy advisor to the United States. You are told that the economy is significantly below its potential output and that the following will happen next year:
-World income will fall significantly,
-food prices and energy prices will increase due to the Ukraine war, and
-the price of oil and gas will be fluctuating significantly due to the still uncertainty on availability of alternative and more sustainable energy sources (wind, solar, hydro, nuclear).
Answer the following questions given the above situations:
a) What kind of policies (under Fiscal policy) might you suggest to the government? Expansionary or Contractionary, then give example of three kind of policies.
b) Consider the economic principle held by Classical economists: The economy always returns to its potential in the long run. What are Keynes’s criticisms of this economic principle?
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Use as many economic principles (from the textbook and other sources) as you can in answering the questions.
Post your answer (400-500 words) to the posted DQ responding to the matter asked, instead of repeating the question or not attending to the question. Substantive answers include making comments using concepts found in the assigned reading materials or offering examples from your experience. Hence merely providing a brief “yes, I agree” or “no, I do not agree” postings are not adequate posts
Write in correct grammar; any errors will translate to a deduction in points.
Check for the spelling; any errors will deduct points.
Your responses must be substantive that include your own thoughts, supported with research (at least two external sources other than textbook, and you must quote these sources).
One point for collaboration. It is intended that your involvement in discussions be of a collaborative nature. Collaboration spirit is quite different from confrontation.
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