Please write in some detail on all of the followings:
1. How does an increase in G affect the economy? Please show it using AD/AS frameowrk.
2. How does an increase in income tax rate affect economy? Please show it using AD/AS frameowrk.
3. Expansionary fiscal policy: what does it mean? How does it work?
4. Contractionary fiscal policy: what does it mean? How does it work?
5. Please distinguish between discretionary and automatic fiscal policy.
6. Please distinguish between the Keynesian and Classical views about the correction of problems that arise from business cycle.
7. Please define MPC and MPS.
8. Please define spending multiplier. What is its significance in fiscal policy discussion?
9. Say, the economy needs $8 bn spending to get out of recession. MPC for the economy is 0.8. What is the multiplier? How much should be the increase in Government spending?
10. What is loanable fund market about? Show it in graph.
11. What are the sources of supply and demand of loanable fund?