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Unformatted text preview: governments borrowing to finance deficits which leads to the crowding-out effect, thus leaving the private sector unwilling to spend and invest. The scope for fiscal stimulus varies from countries to countries where there are different sizes of budget deficits. Although America has the biggest current-account deficit, it still has the greatest scope for fiscal stimulus. It is because of the fewer automatic stabilizers than other countries where spending on fixing unemployment issue is rising in recession....
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This note was uploaded on 03/10/2011 for the course ECON 101 taught by Professor Duc during the Spring '05 term at Linfield.
- Spring '05