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- Under what general macroeconomic circumstances might a government use expansionary fiscal policy? When might it use contractionary fiscal policy?Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending by the University of Illinois is not fiscal policy? Why is a cut in the payroll tax fiscal policy whereas a cut in a state income tax is not fiscal policy?Contingent Liabilities When you take out an ordinary student loan, it is usually the case thatwhoever holds that loan is given a guarantee by the U.S. government, meaning that thegovernment will make up any payments you skip. This is just one example of the many loanguarantees made by the U.S. government. Such guarantees don’t show up in calculations ofgovernment spending or in official deficit figures. Why not? Should they show up?
- This problem gets at the question of whether a government can run a budget deficit forever. For a government to avoid defaulting on its debt, it has to ensure its Debt/GDP ratio doesn’t get too big. Assume that ratio is not too big in the US right now, even though it’s about 100%.a) US nominal GDP has been rising by about 4% in recent years. Assume that continues. How much can US government debt rise each year in percent and keep the Debt/GDP ratio constant? b) If US government debt equaled $23 trillion at the start of this year, how big of a budget deficit could the US government run in dollars this year and still keep its Debt/GDP ratio constant?Excuse me, Dr. Tax, but that position makes little sense. First of all, let me say that this administration’s tax cuts and spending cuts have been and are grossly unfair. The tax cuts have favored the rich, and the spending cuts have reduced programs that help maintain economic security for Americans with low incomes. The present deficit-and the deficits projected for the future-are so large that they threaten our recovery from the recession. Here’s why: All deficits must be paid for by government borrowing, and because the government is borrowing so much money, there is less available for consumers and businesses. With government borrowing now threatening to increase, interest rates will rise and this will reduce spending for houses and cars and, in fact, spending on anything bought with a loan, as well as a business investment that must be financed by borrowing. In other words, some important private borrowing will be crowded out. Sometime next year, the recovery will therefore…Suppose a government has no debt and a balanced budget. Suddenly it decides tospend $10 billion while raising only $8 billion worth of taxes.a) What will be the government's deficit?b) If the government finances the deficit by issuing bonds, what amount of bonds will itissue?c) At a 10 percent rate of interest, how much interest will the government pay eachyear?d) If this same budget deficit occurs for a second year, what would the national debtbecome? And at a 10 percent rate of interest, now how much interest would have to bepaid by the government each year?
- K Because in the government budget deficit increase the real interest rate, budget deficits can O A. decreases; increase OB. increases; increase OC. decreases; decrease O D. increases; decrease firm investment. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.a) Suppose that there are no crowding-out effects and the MPC is 0.8. By how much must the government increase expenditures shift the aggregate-demand curve right $10 billion? b. The model of Long-run Growth, proposes that fiscal policy can have lasting effects on savings, investment, and economic growth. On the other hand, the model of Aggregate Demand-Aggregate Supply suggests that the only long run effect of fiscal policy is an increase in the price level. How could you use the Aggregate Demand and Aggregate Supply model for a more accurate description of the short-run and long-run effects of an increase in government spending? Could you distinguish between different uses of government expenditures to predict their effects on prices and output?A. Calculate the levels of consumption and savings that occurs when the economy is in equilibrium. B. Computer the government budget deficit in this economy. C. If government spending in banana land increases by $1000 what is the amount of the increase in equilibrium output? D. If taxes in banana land decrease by $1000 what is the new equilibrium output in this economy? E. To keep the government budget balanced, of both government spending and taxes in banana land increase by $1000 what is the change in equilibrium income level?
- What are the government’s fiscal policy options for ending severe demand-pull inflation? Which ofthese fiscal options do you think might be favored by a person who wants to preserve the size ofgovernment? A person who thinks the public sector is too large? How does the “ratchet effect”affect anti-inflationary fiscal policy?Which of the following statements about the economic fallout of the Covid-19 pandemic is false? O. Congress acted quickly and responded with unprecedented stimulus programs tohelp households and business that have been hurt because of the Covid-19 pandemic.O. The financing of fiscal stimulus packages significantly reduced the ability ofprivate sector firms to borrow in the loanable funds market.O. In the early months of the Covid-19 pandemic, unemployment agencies wereunequipped to handle the large volume of insurance claims.O. Millions of people have become unemployed because of the Covid-19 pandemic.
