Discretionary Fiscal Policy - Components of the AD and AS Curves - Economics Assignment Help

Assignment Task:

1. It is easier and faster to change discretionary fiscal policy in countries where governments do not have to put forward and win their case in parliament (i.e. autocracies and dictatorships) as opposed to democracies, where they do have to win a vote on the floor of parliament to enact their proposed changes to discretionary fiscal policy. State whether you agree or disagree with this statement, and justify your answer. Your justification can come from information provided in the course, or from external sources (cite your source).

2. (a) Consider a situation where the current output (real GDP) is currently above potential GDP. What type of fiscal policy will the government use to get to potential GDP? Draw an AD-AS diagram to illustrate this situation (including the initial situation). Explain the figure in some detail. By this, we mean do not just explain the changes in the diagram, but also state what components of the AD and AS curves are changing (if any), and in which direction.

(b) Briefly explain if the existence of a fiscal multiplier would help the government in terms of its spending commitments to reach full employment output? 

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