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Economics A Level

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Question:

When dealing with Unemployment, why can Demand-Side Policies be ineffective?

Author: go kys



Answer:

-For Example, during a Recession, the level of Cyclical Unemployment will Increase which may prompt Reflationary Fiscal Policies -This can be bad, if there is a Lack of Information about the Size of a Nation's Output Gap, which may lead to the Economy Overshooting (Proliferating) or not Escaping a Recession -Furthermore, not enough Information on the Size of the Multiplier means that if it is Bigger than Expected, it may lead to Inflation being much more Likely -Finally, it can be Clumsy and Create more Problems - the Time Lag can Prevent Improvements from Developing Fast, or Governments may think the Policy isn't working, and they'll keep on Spending


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go kys
go kys