a. In the textbook, you read that Tyler does not save and plan according to the theory of Ricardian equivalence but Alex is more of a “Ricardian.” In light of this, who probably cuts back their spending the most when taxes temporarily rise: someone like Tyler who is not “Ricardian” or someone like Alex who is? b. If the U.S. government wants to use fiscal policy to shift AD around easily, which one would the U.S. government prefer to make more copies of: Tyler or Alex?

Q: a) Given the following values of consumption, investment, and government purchases (all in (in…

A: Aggregate expenditure is sum of consumption expenditure, govt expenditure and investment in the…

Q: Assume the economy is at an output level that is above the potential GDP, if a contrary fiscal…

A: Fiscal Policy refers to changes in the government expenditure or tax rates in order to bring the…

Q: 8. Which of the following describes crowding out accurately? A) Government, businesses and consumers…

A: Hello, thank you for the question. Since there are  more than three multiple choice questions asked…

Q: Suppose the government decided to increase taxes to rein in consumer spending, but everything else…

A: Given information: The government decided to increase the taxes to rein in consumer spending, but…

Q: Briefly state and evaluate the problem of time lags in enacting and applying fiscal policy. How…

A: Fiscal Policy:Fiscal policy is the tool of government through which it maintains the economy of a…

Q: If the propensity to consume decreases from 95% to 80%, then Fiscal stimulus multiplier does what?…

A: Fiscal stimulus Multiplier, is also known as the Government expenditure multiplier and is given by…

Q: In an attempt to reduce the large budget deficit, the government raised taxes and reduced government…

A: Fiscal policy refers to the use of the government budget to impact the economy. This includes both…

Q: What is the role of the Council Economic Advisers (CEA) as it relates to the effectiveness of the…

A: The Council Economic Advisor or CEA created as in the Employment act of 1946, assists and advice the…

Q: Comment on either (a) the type of fiscal policy or monetary policy that is currently being…

A: Answer(a) The current fiscal and monetary policy can be in such a way that various considerations…

Q: ontrast the effectiveness of fiscal policy in the BKM and AD-AS models.

A: The aggregate demand curve shows the inverse relationship between interest rate and the total…

Q: Which of the following is an example of contractionary fiscal policy? A. Cutting spending B.…

A: Fiscal policies are managed/controlled by the government of the country whereas monetary policies…

Q: What are the three fiscal policy tools and how would each be used to counter a contractionary gap?

A: Fiscal policy tools are the revenue and expenditure tools of the government undertaken to accomplish…

Q: Using diagrams can you please show how the rise in the household saving rate can cause a fall in…

A: The IS curve is downwards sloping to the right which indicates to the fact that the rate of…

Q: Instead of paying transfer (TR) if the government were to increase government spending (G), what…

A: The transfer payment is described as government payments to the individual by social programs like…

Q: Why Krugman believe that fiscal austerity in france or more generally in Europe would fail?

A: Fiscal austerity is used to define the steps or the direction taken by government which leads to…

Q: f an increase in government spending is accompanied by a reduction in spending by firms and…

A: The GDP or the gross domestic product is defined as the value of all final goods and services newly…

Q: Does a balanced budget multiplier of one suggests that the government can stimulate economic growth…

A: The Government stimulates economic growth without changing the size of the budget deficit or surplus…

Q: Say the MPC is .6 and suppose taxes are cut by $300 billion and government spending is increased by…

A: we can calculate the change in government spending by using the multiplier formula as follow-

Q: In which situation would it make the most sense to send stimulus checks as an exapansionary fiscal…

A: Answer: Correct option: b (Forced shut-downs of the economy due to a health pandemic lead to a…

Q: Why do critics charge that fiscal policy has a “big-government bias”?

A: Answer-Fiscal policy is the notion that government should actively stimulate the economy in bad…

Q: Which is considered expansionary fiscal policy? a)a tax increase for wealthy individuals b)an…

A: Fiscal Policy is  the use of tax policy and the government expenditure that can influence the…

Q: and

A: Supply-side economics is theory postulating that tax cuts for the wealthy result in increased…

Q: How relevant is the multiplier concept to the implementation of expansionary and contractionary…

A: Spending multiplier: - it is a fraction that shows the magnitude of the change in national income…

Q: when can we say that fiscal policy succeeded and where/ when can we say that fiscal policy has…

A: Fiscal policy refers to the actions used by governments to stabilize the economy, particularly…

Q: What is fiscal policy and what is the crowding out effect of expansionary fiscal policy?

A: Government use various policy instruments in the economy to properly balance and maintain it and…

Q: Suppose in the country of Miltonia, Ricardian equivalence is 100% true. A- If Miltonian tax rates…

A: One of the most commonly used theories of Professor David Ricardo is the concept of comparative…

Q: t-finance

A: The Ricardian equivalence proposition is a hypothesis which holds that consumers are in turn forward…

Q: Discuss the current Fiscal Policy with the impact of the coronavirus on macroeconomics in place to…

A: To revive any economy from the brink of recession there can two types of policies:- Expansionary…

Q: What is classes as an expansionary fiscal policy?

A: Fiscal policy is the government-imposed policy used to change economic conditions like demand,…

Q: Which of the following is a reason for using expansionary fiscal policy during a recession? a)…

A: A recession is a period of economic slowdown. It is defined as a significant decline in economic…

Q: By using graphs, show and explain the effects of an expansionary fiscal policy on the goods market…

A: Expansionary fiscal policy is defined as how the government initiates with spending more and even…

Q: Discuss the current Fiscal Policy with the impact of the coronavirus on macroeconomics in place to…

A: The economics as a study is based upon the idea that the resources which are present with the…

Q: Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in…

A: Expansionary Policy: Expansionary monetary arrangement incorporates tax breaks, move installments,…

Q: Which statement below is true of ONLY fiscal policy? Uses government expenditures to create demand…

A: The government uses two types of macroeconomics policy which are fiscal and monetary policy. The…

Q: What kind of fiscal policy will you use to fight against inflation. Explain it briefly.

A: Fiscal policy refers to changes in the federal government purchases and taxes, which are intended to…

Q: What should be done to combat inflation or an economy that is growing too quickly using fiscal…

A: Answer: When an economy is experiencing inflation or growing too quickly then the contractionary…

Q: Suppose, government is undertaking expansionary fiscal policy because of recessionary concerns. How…

A: The fiscal policy of the government would result in the policies of the government involving…

Q: Which statement below is true of ONLY fiscal policy? Uses government expenditures to create demand…

A: Fiscal policy refers to the process by which the government adjusts its revenue, expenditure, and…

Q: which of the following individuals would most likely favor an increase in government spending, as…

A: a and d would be opposed to tax cut.

Fiscal Policy and Money Market

Fiscal policy is one of the important tools that is used by the government to control inflation or aggregate demand in the economy. Under this policy, there are two rules which are used by the government, one is the expenditure of the government and the other is the taxation or income of the government which it collects from the public.