Counter-cyclical fiscal policy and monetary policy is meant to increase long-run trend GDP increase GDP growth during expansions smooth out the volatility in GDP increases the inflation rate
Q: Expansionary fiscal policy uses government spending and taxes to increase aggregate economic…
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Q: Identify and explain the purposes, tools, and limitations of fiscal policy.
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A:
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Counter-cyclical fiscal
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increase long-run trend |
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increase GDP growth during expansions |
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smooth out the volatility in GDP |
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increases the inflation rate |
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- Fiscal policy refers to Group of answer choices the techniques used by a business firm to reduce its tax liability. the spending and taxing policies used by the government to influence the economy. the government's ability to regulate a firm's behavior in the financial markets. the behavior of the nation's central bank, the Federal Reserve, regarding the nation's money supply.A temporal government expenditure cut causes the real interest rate to ________ and output to ________ in the long-run fall; remain unchanged rise; remain unchanged fall; fall rise; riseSome form of financial distress can become a full-blown recession if risk lead to ____ interest rates and ____ aggregate demand. a. lower; increased b. higher; increased c. lower; decreased d. higher; decreased
- Income tax collections: Group of answer choices rise during a recession, thus reduce the severity of the recession. rise during a recession, thus increase the severity of the recession. fall during inflationary episodes, thus increase the severity of the inflation. fall during a recession, thus reducing the severity of the recession.In the short run, the increase in investment spending due to the new tax credit shifts the aggregate (supply, demand) curve to the (left right), causing the price level to (fall below, rise above) the price level people expected, and the quantity of output to (fall below, rise above) potential output. The investment tax credit will cause the unemployment rate to (fall below, rise above) the natural rate of unemployment in the short run.The spread between interest rates on low quality corporate bonds and U.S. government bonds Question 10 options: 1) narrowed significantly during the Great Recession. 2) widened significantly during the Great Recession. 3) narrowed moderately during the Great Recession. 4) did not change during the Great Recession.
- Long-run economic growth can be achieved with Group of answer choices A rightward shift in the aggregate demand curve. A rightward shift in the long-run aggregate supply curve. Neutral monetary policy. Contractionary fiscal policy.Since the committee's meeting labor market conditions deteriorated and the available data indicate that consumer spending, business investment and industrial production have declined. Finiacial markets remain quite strained and credit conditions tight. identify the policy action is fiscal or monetary identify the policy is expansionary or contraction artIf the Fed overcorrects the economy during a period of decreased consumer spending...... ) underemployment can continue to be an issue unemployment can continue to be an issue () fiscal policies will be meaningless inflation can occur during the recovery ) foreign firms will purchase fewer US goods since the US dollar has appreciated
- The importance of fiscal policy during times of economic recession. The reason why fiscal policy should be in tune with monetary policy when the economy is in the recession phase. The importance of the Central Bank in the financial market.Great Recession and Great Depression were similar except Group of answer choices Stock Market crash High Unemployment Role of the Fed Bad loans by banksWhich of the following is most commonly used to monitor short-run changes in economic activity? Answer the inflation rate real GDP aggregate demand aggregate supply
