Author Question: A fiscal rule which involves a ceiling to government borrowing as a percentage of GDP (Read 20 times)

pepyto · **on:** May 25, 2020

Question 1

If a government were using fiscal policy for stabilisation in a ________ it would ________.
◦ recession, raise taxes
◦ boom, decrease taxes
◦ boom, increase spending
◦ recession, increase spending

Question 2

A fiscal rule which involves a ceiling to government borrowing as a percentage of GDP
◦ prevents the use of discretionary fiscal policy at any time as long as the government abides by the rule.
◦ prohibits the of expansionary fiscal policy when the economy is already at the ceiling.
◦ prohibits the use of contractionary fiscal policy when the economy is already at the ceiling.
◦ both B and C

fromAlphatoOmega22 · **Reply #1 on:** May 25, 2020

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