considered a negative effect of increased government spending.

Q: Question 44 During normal times, discretionary fiscal policy O is very effective. O is probably not…

A: During normal times, discretionary fiscal policy is not much effective in stabilizing economy, as…

Q: Is expansionary fiscal policy more attractive to politicians who believe in larger government or to…

A: The expansionary fiscal policy is more attractive to politicians who believe in larger government.…

Q: How could the government deal with the crowding out effect generated from applying the expansionary…

A: Crowding out effect occurs when the increase in spendings or investment by the government crowds out…

Q: effectiveness

A: Fiscal policy is the use of government spending and tax policies in order to influence economic…

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: In 2050, the government has collected $10,227 billion in revenues from taxes but has spent $10,584…

A: A budget deficit occurs when government spending is greater than government tax collection i.e.,…

Q: If the marginal propensity to consume is 0.2 and the government increases its spending by ¥1…

A: Marginal propensity to consume is 0.2 => MPC = 0.2 ----------------- Spending multiplier = 1 / (1…

Q: Based on your understanding of the multiplier effect and the crowding-out effects, do you think that…

A: The macroeconomic equilbrium in an economy occurs at the point where the aggregate demand in the…

Q: Assume an economy is in recession and the government is considering using fiscal stimulus measures…

A: When government raises its expenditure on investment, it leads to a rise in the aggregate demand in…

Q: Many economists think discretionary fiscal policy is of limited effectiveness in stabilizing the…

A: Discretionary fiscal policy is the policy of government that alters the spending of government or…

Q: Do you believe the traditional or the Ricardian view of government debt? Justify your response?

A: The traditional view of government debt assumes that when the government lowers taxes and runs a…

Q: Council Economic Advisers (CEA)

A: The Council Economic Advisers[CEA] consist of three members. The Chairperson, who is appointed by…

Q: Explain how automatic stabilizers work, both on the taxation side and on the spending side, first in…

A: Automatic stabilizers are economic parameters that act automatically to counter the fluctuations in…

Q: Explain what crowding out is and why it reduces the impact of fiscal stimulus.

A: The government adopts fiscal policy to regulate the economy. In this, the government increases its…

Q: Discuss two reasons why discretionary fiscal policy (expansionary & contractionary) may be…

A: Contractionary fiscal policy:- When the government either slashes expenditure or hikes taxes, it is…

Q: Federally funded student aid programs generally reduce benefits by $1 for every $1 that recipients…

A: The government purchases refers to the expenditure of the government on the final goods and…

Q: Given the incentive of elected political officials to spend and their reluctance to tax, two-thirds…

A: According to the statement, the elected political candidates reluctance is to spend on the tax.…

Q: Which fiscal policy would make a budget surplus smaller or a budget deficit larger? lower government…

A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…

Q: Write and apply the concept of multiplier with the help of suitable example and diagram. How does…

A: Fiscal policy: It refers to the policy which is used by the government to correct the various…

Q: The crowding-out effect works through interest rates and it tends to: a.Increase the effectiveness…

A: When government raises its expenditure on investment, it leads to a rise in the aggregate demand in…

Q: Explain each of the tools that exist in expansionary fiscal policy and contractionary fiscal policy.

A: Fiscal policy is the use of government spending and taxation to adjust the economy. It is a method…

Q: Derive and discuss the three major fiscal policy multipliers

A: Assuming an open economy where output is exactly equal to the sum of consumption expenditure,…

Q: Take into account the economy in which the current income level is $ 600 billion, the government…

A: To increase income, government spending has to increase. Increase in government spending = required…

Q: True or False and explain: Fiscal Policy is effective at reducing the duration of an economic…

A: Fiscal policy refers to the method of government spending and tax policies to control the economic…

Q: crowding out

A: Crowding out is a situation when increased interest rate leads to reduction in private investment…

Q: Distinguish between discretionary and nondiscretionary fiscal policy. What is the difference? What…

A: SUMMARY- Discretionary fiscal policy alludes to the policy drives taken up by the public authority…

Q: How do economists distinguish between the absolute and relative sizes of the public debt? Why is the…

A: Absolute size of the public debt: It is the total accumulation of the deficits (minus the surpluses)…

Q: What are the desirable and undesirable effects of using a lump-sum tax to finance government…

A: A lump-sum tax is an exceptional method of tax collection, in view of a fixed sum, as opposed to on…

Q: Which one of the following statements is TRUE about the concept of crowding out? Select one: a.…

A: Fiscal policy refers to the set of measures adopted by the government of an economy to correct…

Q: Explain the 3 types of lag we should be concerned about when implementing fiscal policy?

A: When a policy is implemented there are certain lags due to the difference in the period when the…

Q: Describe the supply-side effects of a fiscal stimulus and explain how a tax cut will influence…

A: The supply-side effects of fiscal-stimulus: Fiscal-stimulus can be given in the form of higher…

Q: What is the difference between debt and deficit? Explain why there is no time lag for automatic…

A: Deficit is the difference b/w the amount that is received and what is spent by the government of a…

Q: discretionary fiscal policy and nondiscretionary or built-in stabilization policy.

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: What issue or problem in the economy would be fixed with expansionary fiscal policy? Contractionary…

A: Expansionary-Fiscal policies are targeted towards increasing the consumption in the…

Q: As federal government borrows more money to finance its deficit, it may lead to crowding out.…

A: As the federal government borrows more money to finance its deficit, the supply of household savings…