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Tutorial 5_2011 - ECON1002 Introductory Macroeconomics S1...

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ECON1002 Introductory Macroeconomics, S1 2011 Tutorial Tasks 1 Key Concepts: Balanced budget multiplier, Automatic stabilisers, Government budget constraint, Stance of fiscal policy, Deficits and Public debt. R EVIEW OF C ONCEPTUAL U NDERSTANDING These are to be attempted before the tutorial. They will not normally be covered in the tutorial, maybe, except for a quick review, time permitting. The answers are typically found in the textbook and lecture notes. 1. What do you understand by the balanced budget multiplier? Why do taxes and government purchases have different impacts on the economy? Explain. 2. What are the limitations of fiscal policy as a stabilisation tool? How could these limitations be overcome, if any? 3. Why is the intergenerational consideration important for fiscal policy? What is the economic rationale for the ‘Future Fund’? 4. What is the relation between fiscal policy and the public debt? P
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Tutorial 5_2011 - ECON1002 Introductory Macroeconomics S1...

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