What is goin on
i work it out as multiplier equals change in income/change in consumption so i got 1.25 then i used that formula k=1/MPS, so
1.25=1/MPS
MPS= 1/1.25
MPS = 0.8
then since MPS + MPC = 1
so MPC = 0.2
well since this isnt even on the choices i must be doin sumthang...
CAD vs growth
well what happens is when there is high levels growth, this results in an increase in demand for imports, which may cause the goods balance to deteriorate and higher CAD, so if the government wants to reduce the CAD they have to use contractionary policies such as higher interest...
how do use fiscal
well to use fiscal the government uses budget surplus, the government uses the surplus of cash to pay off the foreign debt and encourage savings as it does not cause the crowding out effect
cyclical and structural
so first talk about the cyclical causes of the CAD- like when domestic demand for imports is high and the global economy is going through a downturn.. this leads to deterioation in the goods balance and higher CAD
then u talk about the structural factors such as...