Expansionary fiscal policies

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(a) Focusing on an open economy, if the government runs a debt funded budget deficit what happens in the market for loanable funds and foreign exchange and how does NFI change?

(b) Explain how an expansionary fiscal policy affects AD, SRAS and LRAS. What is the difference between discretionary fiscal expansion and fiscal expansion that arises from automatic stabilisers? How does the multiplier and crowding out affect expansionary fiscal policies?

Reference no: EM133066185

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