Writeup 1 page answer the questions bellow How would Sony PS

Write-up 1 page answer the questions bellow.

How would Sony PS4 respond to an expansionary any fiscal policy? What about an increase in the interest rate? Give some examples.

Solution

Expansionary fiscal policy refers to increase in government expenditure or cut in taxes. The iexpansionary fiscal policy shift the IS curve rightward thus it leads to higher interest rate and output. Thus sony should cut down the investment since the interest rate in the market is higher.

The increase in interest rate increases the cost of incvestment thus firms should avoid investing in building capital