Describe Some of the Potential Problems with Using Expansionary Fiscal

question 38

Essay

Describe some of the potential problems with using expansionary fiscal policy.

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Definitions:

Hard Capital Rationing

A situation where a company is unable to secure additional funding from external sources like equity or debt markets.

NPV Projects

Projects evaluated using the Net Present Value method, which calculates the difference between the present value of cash inflows and outflows over a period.

Internal Constraints

Limitations within an organization that restrict its ability to achieve its goals, such as budget constraints, limited manpower, or technology restrictions.

Straight-Line

A method of calculating depreciation or amortization by equally spreading the cost over the useful life of an asset.