13. When the Turkish government wants to allow only for automatic stabilizers to work in a recession, it will a. reduce the interest rate b. sell government bonds c. have higher government expenditure on unemployment benefits d. increase the value-added tax
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- You are studying an economy with an income tax rate, t1, of 32%and an MPS of 0.3. It is currently suffering from a “recessionary gap” of $500 m. (i.e., Eqm Y<Y full employment, FE, aka Yn). Make the necessary calculations for the topolicythat it should institute; who does what? Provide the full name of this policy. Compare this economy to one without income taxes to explain the term “automatic stabilizer.”[Hint: Let I change and compare the I multipliers in each of these economies.] \Suppose the government borrows $20 billion more next year than this year. a. Use a supply-and-demand diagram to analyse this policy. Does the interest rate rise or fall? b. What happens to investment? To private saving? To public saving? To national saving? Compare the size of the changes to the $20 billion of extra government borrowing. c. Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. What does this belief do to private saving and the supply of loanable funds today? Does it increase or decrease the effects that you discussed in parts (a) and (b)?Q) In case of DEFLATION, mention that which particular type of fiscal policy will be used and why and either each fiscal policy tool will be increased or decreased. Explanation and reasoning for each tool and its working separately is must.
- a. You are studying an economy with an income tax rate, t1, of 32% and an MPS of 0.3. It is currently suffering from a “recessionary gap” of $500 m. (i.e., Eqm Y<Y full employment, FE, aka Yn). Make the necessary calculations for the to policy that it should institute; who does what? Provide the full name of this policy. Compare this economy to one without income taxes to explain the term “automatic stabilizer.” [Hint: Let I change and compare the I multipliers in each of these economies.]20. . If US economy moves into an expansion while producing more than potential GDP, then: a) government spending and tax revenue will increase because of automatic stabilizers. b) government spending and tax revenue will decrease because of automatic stabilizers. c) automatic stabilizers will increase government spending and decrease tax revenue. d) automatic stabilizers will decrease government spending and increase tax revenue.Suppose a closed economy generates $2800 output and income in equilibrium. Suppose also that the government spends 350 and imposes a lump-sum tax of 50. By how much is the government in deficit? (round your answer to the nearest whole value)
- When the U.S government runs a Deficit, the savings curve in the market for loanable funds shifts to the____ ___ investment rates and _____domestic investment net capital outfiow.Multiple ChoiceO. right increasing; increasing O. left increasing; decreasing O. right decreasing; increasing O. left decreasing; increasingA. Differentiate between discretionary fiscal policy and nondiscretionary or built-in stabilization policy. B. When in a recession a government has the option to increase government spending or decrease taxes to stimulate the economy. Discuss which piece of GDP is being targeted when each is used.Find the value of fiscal deficit if revenue deficit is $210 million, capital expenditure is $55 million and capital receipt excluding Borrowings is $20 million
- 'The U.S., world's largest economy, went into recession in February of 2020. It has taken a broad range of steps to combat the economic disruption caused by COVID-19. In response to this crisis, governments have enacted sweeping and sizable fiscal stimulus of trillions of dollars.' Is it an appropriate policy response if the primary responsibility of the government is to maintain economic growth? Explain the significance of Fiscal policy for an economy? Is there any difference in the two approaches of fiscal expansion through - direct transfer benefit and government spending directly on purchase of goods and services that may influence real GDP? What role does multiplier play? Explicate. Support your answer with the suitable diagram/s.Find the value of Fiscal deficit if total expenditure is $2300, revenue receipts is $1500 and disinvestment proceeds are $100Aa3 a. Private saving is : $ ___Trillion b. Investment Spending is : $___Trillion c. Transfer Payments are: $___Trillion d. The government budget balance is : $ ___Trillion and as a result the government budget is in ___( deficit or surplus) Please show your work. (thumbs down for wrong answers)
