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Expansionary Fiscal Policy Discussion

Expansionary Fiscal Policy Discussion

Question Description

I’m working on a macro economics question and need an explanation and answer to help me learn.

1. What would happen if expansionary fiscal policy was implemented in a recession but due to lag, did not actually take effect until after the economy was back to potential GDP?

2. What is the main reason for employing expansionary fiscal policy during a recession?

3. In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine. Who has the absolute advantage in production of sweaters? Who has the absolute advantage in the production of wine? How can you tell?

4. If the removal of trade barriers is so beneficial to international economic growth, why would a nation continue to restrict trade on some imported or exported products?

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