If the government announces that it has increased the corporate tax rate from 25% to 35% and the income tax rate from 20% to 30%, what kind of policy will it follow? A) contractionary fiscal policy B) Supply-side policy C) contractionary monetary policy D) Expansionary monetary policy E) Expansionary fiscal pol

Q: Fiscal policy is usually used during recessions because it is takes less time to implement than…

A: Recession:  The term recession refers to the period in which economic activities slow down and…

Q: Analyze fiscal policy in order the generate macroeconomic stability.

A: The policy that depicts making use of a collection of revenue by government and expenditure in order…

Q: If government policy makers were worried about the inflationary potential of the economy, which of…

A: When government worried about inflation, it can use contractionary fiscal policy to reduce the…

Q: What is the crowding out effect? Discuss the effectiveness of fiscal policy under the crowding out…

A: Answer: Step 1: The crowding-out effect refers to the decline in private investment due to fiscal…

Q: When there is a problem of a delay in terms of implementation of the fiscal policy, that would be…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: When the economy is going through recessionary gap, which of the below policy is more likely to be…

A: Aggregate Demand curve (AD) is the downward sloping curve which shows an inverse relationship…

Q: In a closed economy, is the fiscal policy effective when the demand for money is interest rate…

A: A closed economy is defined as a country that is self sufficient and autarkic. A closed economy is…

Q: Raising Government Spending is one of the bellow options? contractionary fiscal policy expansionary…

A: Definitions- Fiscal policy- The fiscal policy is the use of government revenue (taxes or tax cut)…

Q: Macroland implements a combination of expansionary fiscal and monetary policies. What will be the…

A: Fiscal Policy refers to the policy used by the central government to control the money supply in the…

Q: please answer the following question: 1. Automatic stabilizers: A) work without the need for…

A: A boom illustrates a phase of elevated or rised growth within a business, market, industry, or…

Q: Which of the following statements about Fiscal Policy is INCORRECT? choose the correct answer (a) In…

A: Fiscal policy is independently implemented or used by the government to make changes in the market…

Q: As discussed in the class, discretionary policies are the actions the administration takes in order…

A: The macroeconomic policies that are formulated in the wake of the changes in the economy, by the…

Q: When there is a problem of a delay in terms of implementation of the fiscal policy, that would be…

A: Execution tag- The period between the conclusion of one task and the beginning of a different…

Q: According to Classical economists, which type of fiscal policy financing produces "crowding out? a.…

A: Fiscal policy implies the use of government expenditure or tax revenue in order to change the…

Q: What is the reason why fiscal policy should be in tune with monetary policy when the economy is in…

A: Recession is a period of time in an economy when there is low or slow growth in economy wherein the…

Q: If stability of the economy is the primary objective of Fiscal Policy, then an Annually Balanced…

A: An annual balanced budget refers to when the spending of the government during a fiscal year equals…

Q: Give a numerical example and illustrate the difference between complete crowding out, incomplete…

A: Answer - Thank you for submitting the questions but, we are authorized to solve one question at a…

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A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: How do (a) Income tax during inflation, (b) Unemployment benefits and other transfer payments during…

A: Automatic Stabilizer:-  Automatic stabilizers are long-term governmental programmes that modify…

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A: Stagflation alludes to a circumstance when the economy was confronting high inflation and high…

Q: Which of the following is an appropriate fiscal policy response if the economy is in a state of…

A: The fiscal policy is the policy of the government in the economy to control the spending levels of…

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

Q: According to the traditional Keynesian analysis, if the government increases spending and pays for…

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Q: According to Classical economists, which type of fiscal policy financing produces "crowding out? a.…

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Q: What is the crowding out effect? According to monetarists, what is the effectiveness of fiscal…

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Q: Question 6: Compare and contrast the function of fiscal policy during short term and long term…

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

Q: Define the following: -Inside lag -Outside lag   Which has the longer lag-monetary or fiscal…

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Q: The graph below depicts an economy where an increase in aggregate demand has caused inflation.…

A: Given information: Initial long-run equilibrium occurs at the intersection point of LRAS, AS, and…

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A: The fiscal policy is the policy of the central government regarding the taxation and the government…

Q: What is supply-side economics? Does it oppose the Classical, Keynesian, or Monetarist theory? How…

A: Answer:- Suррly-side  eсоnоmiсs  is  а  mасrоeсоnоmiс  theоry  whiсh  аrgues  thаt  eсоnоmiс  grоwth…

Q: The 'automatic mechanism' can best be described as using fiscal or monetary policies to stabilize…

A: Automatic Mechanism is also known as self correction.

Q: Which statement below is true of ONLY fiscal policy? Uses government expenditures to create demand…

A: Fiscal policy refers to the process by which the government adjusts its revenue, expenditure, and…

Fiscal Policy and Money Market

Fiscal policy is one of the important tools that is used by the government to control inflation or aggregate demand in the economy. Under this policy, there are two rules which are used by the government, one is the expenditure of the government and the other is the taxation or income of the government which it collects from the public.