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Role of fiscal policy - Understanding of economic theory

There is much discussion among economists about the role of fiscal policy as a tool to help the economy to recover from recession.

We have seen in the lecture that some of estimates of the fiscal multipliers (especially the government expenditure multipliers) are quite low.

Using the following clues(a-d), research the limitations of expansionary fiscal policy and write a one page essay on the limitations with reference to these 4 clues.
Spending on imports.
Consumer confidence.
Time.


†Investment.
Note:There are other problems with fiscal policy not related to these clues.

The focus of your essay however should be on limitations related to these four clues.

In your essay you should demonstrate the following:
Understanding of economic theory
Ability use examples/research to support your ideas

Role of fiscal policy - Understanding of economic theory

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