Fiscal Policy -> Inflation?

2011-04-16 3:07 am
I don't understand this line at all.

"The direct effect of fiscal policy on short-term output, and thus inflration comes through its role in shifting aggregate demand."

What short-term output it's talking about? And what demand? Can someone help?

回答 (2)

2011-04-18 4:51 pm
✔ 最佳答案
Too general a question and very vague.

Understand that inflation is the state where more money is chasing fewer goods or services.

Its saying that Fiscal Policy will change demand for a good or service. In this case increase demand thus increasing inflation.

For example, if the government says, "No more drilling offshore" then the price of gasoline and oil skyrocket.
2016-12-03 12:54 pm
expansionary it would desire to purchase sources from economic establishments and then, those would desire to lend human beings money decrease taxes, so human beings have greater money to spend greater inflation so human beings/banks start up spending/lending money lower back or economic stimulus

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