Th4.1: Demand Side Policies Flashcards
1
Q
What can be used to reduce AD?
A
monetary or fiscal policy
2
Q
This reduces income and so…
A
reduces demand for imports
3
Q
Why should it be effective?
A
since there is high income elasticity for imports
4
Q
However, why is there a reduction in living standards and growth?
A
they are only short term and limit output of the economy
