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The Main Instruments Of Government Macroeconomic Policy
The Main Instruments Of Government Macroeconomic Policy

Level 2 Economics (91224) 2012
Level 2 Economics (91224) 2012

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... sector. A fiscal expansion can exert upward pressure on long term interest rates and crowd out private investment or it may induce private households to save more if fiscal expansion raises fears of higher taxes in the future. This “Ricardian equivalence” behaviour is very common in countries with h ...
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... availability of bank loans, the wealth of households, and foreign exchange rates. For example, a decrease in real interest rates lowers the cost of borrowing and leads to increases in business investment spending and household purchases of durable goods, such as autos and new homes. In addition, low ...
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Business cycle

The business cycle or economic cycle is the downward and upward movement of gross domestic product (GDP) around its long-term growth trend. These fluctuations typically involve shifts over time between periods of relatively rapid economic growth (expansions or booms), and periods of relative stagnation or decline (contractions or recessions).Used in the indefinite sense, a business cycle is a period of time containing a single boom and contraction in sequence.Business cycles are usually measured by considering the growth rate of real gross domestic product. Despite being termed cycles, these fluctuations in economic activity can prove unpredictable.A boom-and-bust cycle is one in which the expansions are rapid and the contractions are steep and severe.
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