Why would a government want to use expansionary fiscal policy to help stimulate aggregate demand if, in the long run, we would e

Question

Rudik [331]

3 years ago

12

Why would a government want to use expansionary fiscal policy to help stimulate aggregate demand if, in the long run, we would e

xpect prices to adjust and the economy to return to its long-run equilibrium on its own?

Business

1 answer:

Oksana_A [137] · Answer 1 · 2022-05-25T04:07:58+03:00

Answer:

It could take a long time for prices to adjust by market forces alone.

Explanation:

Based on the information provided within the question it can be said that the the government would want to do this mainly due to the fact that It could take a long time for prices to adjust by market forces alone. Therefore by using expansionary fiscal policy they would speed this process up and get prices adjusted in a much shorter time-frame.