Answer to Question #226566 in Macroeconomics for Sara

Question

Expansionary policies and the composition of economy can move to full employment by an expansion in either money
or the full-employment deficit. Which policy leads to E1
and which to E2
? How would you
expect the choice to be made? Who would most strongly favor moving to E1
? versus E2
?
What policy would correspond to “balanced growth”?

Answer 1

Expansionary policies may move to full employment. When it becomes easier borrow money, individuals tend to spend much income as they invest more. Expansionary policies would also correspond to balanced growth as investment tends to enhance the budget value of a person or company.