Assume the economy is operating at less than full-employment output and the federal budget is balanced.(a) Using a correctily labeied aggregate supply and aggregate demand graph, show the following:I. Real output, labeied as Y;H. Price level, labeied as PL(b) Identify one fiscal policy the government could use to return the economy to full-employment output.1. Explain how that policy works to achleve full-employment output.i. Identify the effect of the policy on the federal budget.i, Identify the effect of the pollicy on the national debt.(c) On the graph you drew tor part (a), show the effect of the fiscal policy you identified in part (b). Identify the effects of the fiscal policy on each ofthe following:I. Real outputII. Price levelI. Employment. Explain.

Economy is said to be at the full employment level when all the factors of production are…

Assume the economy is operating at less than full-employment output and the federal budget is balanced. (a) Using a correctly labeied aggregate supply and aggregate demand graph, show the following: I. Real output, labeled as Y I. Price level, labeled as PL (b) Identify one fiscal policy the government could use to return the economy to full-employment output. I. Explain how that policy works to achieve full-employment output. ili. Identify the effect of the policy on the federal budget. . Identify the effect of the policy on the national debt. (c) On the graph you drew for part (a), show the effect of the fiscal policy you identified in part (b). Identify the effects of the fiscal policy on each of the following: I. Real output II. Price level HI. Employment. Explain.

Assume the economy is operating at less than full-employment output and the federal budget is balanced. (a) Using a correctly labeied aggregate supply and aggregate demand graph, show the following: I. Real output, labeled as Y I. Price level, labeled as PL (b) Identify one fiscal policy the government could use to return the economy to full-employment output. I. Explain how that policy works to achieve full-employment output. ili. Identify the effect of the policy on the federal budget. . Identify the effect of the policy on the national debt. (c) On the graph you drew for part (a), show the effect of the fiscal policy you identified in part (b). Identify the effects of the fiscal policy on each of the following: I. Real output II. Price level HI. Employment. Explain.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 5P

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Similar questions

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What is the main reason for employing contractionary fiscal policy in a time of strong economic growth?