Chapter 9: Economic Growth II: Technology, Empirics, and Policy In the Solow growth model with the break-even level of investment must cover . . and O a. population growth/ depreciating capital / capital for new workers. Ob. population growth / unused capital / capital for new workers. Oc. population decline/depreciating capital/ capital for new workers. Od. outside immigration/ unused capital / wages for new workers. O e. population decline / depreciating capital / wages for new workers.

Chapter 9: Economic Growth II: Technology, Empirics, and Policy In the Solow growth model with the break-even level of investment must cover . . and O a. population growth/ depreciating capital / capital for new workers. Ob. population growth / unused capital / capital for new workers. Oc. population decline/depreciating capital/ capital for new workers. Od. outside immigration/ unused capital / wages for new workers. O e. population decline / depreciating capital / wages for new workers.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 15P

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What, if anything, does expansionary fiscal policy do in the i-M space graph, cet. par.? Explain. Indicate the disequilibrium that is created at the initial interest rate and explain what will happen and why. There is a liquidity trap in the i-M space graph. Show what this means in the i-M graph and then explain what type of macro policy will not work.
Need help with this. Thanks ! 1. What is the difference between what Supply Side economists expect to happen when taxes are cut and what Keynesian and other economists expect to happen when taxes are cut? (Explain in turn which curve Supply Siders expect to shift and which way,, and which curve Keynesians expect to shift, and which way.) 2. A. What are two examples of "automatic stabilizers" that might kick in during a recession to reduce the size of the downturn? B. Which component of Aggregate Demand (C, I, G, or X-M?) do automatic stabilizers affect? 3. What is the difference between a government budget deficit and the national debt?
In which of the following circumstances is expansionary fiscal p In which of the following circumstances is expansionary fiscal policy more likely to lead to a short-run increase in investment? Explain.a. When the investment accelerator is large or when it is small?b. When the interest sensitivity of investment is large or when it is small?
1. What is the difference between what Supply Side economists expect to happen when taxes are cut and what Keynesian and other economists expect to happen when taxes are cut? (Explain in turn which curve Supply Siders expect to shift and which way,, and which curve Keynesians expect to shift, and which way.) 2. A. What are two examples of "automatic stabilizers" that might kick in during a recession to reduce the size of the downturn? B. Which component of Aggregate Demand (C, I, G, or X-M?) do automatic stabilizers affect? 3. What is the difference between a government budget deficit and the national debt?
Assume that an economy is experiencing simultaneous equilibrium in both the product market and money market. Furthermore, assume the MPC is currently around a normal level of 0.65 and the sensitivity of real money demand to also around a normal level. If the MPC rises to 0.8 and also the sensitivity of real money demand to changes in the income rises well, use the IS-LM model to illustrate the impact of an expansionary fiscal policy. Label the initial point prioer to the fiscal policy as A and the new point following the expansionary policy as B.
(J) Which of the following statements regarding the debate over stabilization policy are correct? Check all that apply. Advocates of active stabilization believe that implementation lags for fiscal and monetary policy do not exist. Opponents of active stabilization policy believe that significant time lags in both fiscal and monetary policy often exacerbate economic fluctuations. Advocates of active stabilization policy believe that the government can adjust monetary and fiscal policy to counteract waves of excessive optimism and pessimism among consumers and businesses. Opponents of active stabilization believe that active fiscal and monetary policies have no effect on aggregate demand.
Suppose the government undertook a fiscal policy by increasing government expenditure by 20 percent. Clearly demonstrate how this would result in the crowding out phenomena.c. Suppose the instead of fiscal policy, the government, through its monetary authority undertook an expansionary monetary policy by increasing nominal money supply by 20 percent. Clearly demonstrate how this would result in the crowding in phenomena.
Assuming that the money demand function depends on income, the interest rate and the price level as presented in class, then if planned investment decreases as the interest rate increases, the size of the government spending multiplier for expansionary fiscal policy will be________ than it was when we ignored the money market. a)exactly the same b)larger c)smaller
An economy is in long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. What kind of gap - inflationary or recessionary - will the economy face after the shock, and what type of fiscal policies would help move the economy back to potential output? How would your recommended fiscal policy shift the aggregate demandcurve? (Note: you do not need to draw anything).(a) A stock market boom increases the value of stocks held by households.(b) Firms come to believe that a recession in the near future is likely.(c) Anticipating the possibility of war, the government increases its purchases of military equipment.(d) The quantity of money in the economy declines and interest rates increase.
4. Analyze the effects of a contractionary fiscal policy on IS-LM model and AD-AS model when the labor market presents rigidities and nominal wages are not dynamic. Explain carefully and use the graphs.
Asap both 1.a) Which of the following statements is correct?l.Expansionary fiscal policy is used to remove a recessionary gap.ll. Expansionary fiscal policy is used to shift AD right.A) l onlyB) I onlyC)both I and ID) neither I nor ll 1.b) Which of the following are examples of contractionary fiscal policy?A) decreasing government expendituresB) increasing taxesC) increasing transfer paymentsD) A and B are both contractionary fiscal policiesE) A, B, and C are all contractionary fiscal policies
What is the crowding-out effect? How does it modify the implications of the basic Keynesian model with regard to fiscal policy? How does the ne classical theory of fiscal policy differ from the crowding-out model?