Ceteris paribus, in an open economy, a stable government fiscal policy enables firms to invest more assuredly.

Question

Quizplus · Accepted Answer

In an open economy, the government fiscal policy can have a significant impact on investment decisions by firms. When the government implements a stable fiscal policy, firms can plan their investments more effectively because they have a better understanding of the economic environment they will be operating in. This enables them to invest more assuredly because they can anticipate any changes in tax rates, government spending patterns, or other macroeconomic factors that could affect their operations. As a result, stable government fiscal policy tends to be beneficial for investment in an open economy.

Ceteris Paribus, in an Open Economy, a Stable Government Fiscal