They are increasing government spending and cutting taxes; each increases the amount of money circulating in the economy. The demand for various products and services will increase as people have a lot that they are willing to spend to acquire the products. The value of the items will consequently grow, leading to increased business profits and expansion of the GDP, thus enabling stability.
The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country’s products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. How will the use of the fiscal policy tools stabilize the economy?
Answer by Academic.tip's expert
An answer to this question is provided by one of our experts who specializes in business & economics. Let us know how much you liked it and give it a rating.
Cite this page
Select a citation style:
References
Academic.Tips. (2022) 'The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. How will the use of the fiscal policy tools stabilize the economy'. 3 November.
Reference
Academic.Tips. (2022, November 3). The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. How will the use of the fiscal policy tools stabilize the economy? https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t/
References
Academic.Tips. 2022. "The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. How will the use of the fiscal policy tools stabilize the economy?" November 3, 2022. https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t/.
1. Academic.Tips. "The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. How will the use of the fiscal policy tools stabilize the economy?" November 3, 2022. https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t/.
Bibliography
Academic.Tips. "The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. How will the use of the fiscal policy tools stabilize the economy?" November 3, 2022. https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t/.
Work Cited
"The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. How will the use of the fiscal policy tools stabilize the economy?" Academic.Tips, 3 Nov. 2022, academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t/.
Copy