Describe the two key tools of monetary policy, and describe how they would be used by the Bank of Canada to implement a contractionary monetary policy.
The economy of Kenya is in recession, and the recessionary gap is large. The World Bank hires you as its economist and asks you to
a. describe the discretionary and automatic fiscal policy actions that might occur.
b. describe a discretionary fiscal stimulation package that could be used that would not bring a budget deficit.
c. describe the risks of discretionary fiscal policy in this situation.
d. explain the argument that lower corporate tax rates can increase tax revenue in Kenya. Consider the Laffer curve in your explanation.