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Long questions


Question 1

(a) Explain what is meant by a) tightening and b) loosening of fiscal policy.

(b) "Unemployment can best be reduced through the use of demand-side policies". Do you agree? Justify your answer.

Question 2

(a) Explain the difference between discretionary fiscal policy and automatic stabilisers

(b) Discuss the effectiveness of two fiscal policy options available to a country experiencing a recession.