In a binding situation,an increase in net taxes Select one: O a. causes the ADcurve to become horizontal. O b. does not shift the ADcurve. O c shifts the AD curve to the left. O d. shifts the ADcurve to the right.
Q: Suppose that the MPC is 0.80 and there is an AD excess of $1,200 million. Which of the following is…
A: MPC = 0.80 EXCESS AD = $1200 MILLION…
Q: Another part of the initial fiscal response to the Covid-19 recession were checks sent to every ad…
A: Another part of the initial fiscal response to the Covid-19 recession were checks sent to every…
Q: An economy is initially described by the following equations: C - 60 + 0.8(Y-T) I- 120-Sr MIP -…
A:
Q: Which of the following is not a weakness of fiscal policy? O a. Fiscal policy might have undesirable…
A: Economics as a subject deals with the allocation of scarce resources among humans with unlimited…
Q: In a binding situation,an increase in net taxes Select one: O a. causes the ADcurve to become…
A: Aggregate demand (AD) is defined as the total amount of commodities and services that is bought by…
Q: Time lags, crowding-out, and savings shifts are all O a) examples of countercyclical fiscal policy.…
A: The policy that makes use of taxation and government spending for influencing the economy is being…
Q: Which of the following statements about the economic fallout of the Covid-19 pandemic is false? O.…
A: The Covid 19 pandemic is one of the uncertainties that influenced the economies of almost all the…
Q: Suppose real GDP is $1.7 trillion, potential real GDP is $1.8 trillion, and the federal government…
A: Suppose When the Real GDP is $1.7 trillion, the potential GDP is $1.8 trillion and the federal…
Q: Question 3 Given the following information: 1= 150, G = 150, T-150 and C = 150 +0.75(Yd) Which of…
A: Here, given information is, Investment (I): 150 Government spending (G): 150 Taxes (T): 150…
Q: consumers increased consumption by a relatively small amount in 2008 and 2009 because thet believe…
A: This is explained by the permanent income hypothesis which implies that people will spend money…
Q: Determine how each of the following monetary or fiscal policy would shift the aggregate demand…
A: a. Assuming the economy is currently producing above the full employment output, the government…
Q: Suppose AS decreases by $50 billion for every 1 percentage point increase in business tax rates. By…
A: Answer; Increase in tax rate = 28 -22 = 6%.
Q: 2. Consider an economy where aggregate demand AD consists of aggregate con- sumption C 10+ 0.8Y,…
A: Answer: Given, C=10+0.8YI=1000G=800 (d). The formula to find the government spending multiplier is…
Q: When spending by the federal government exceeds net taxes, O a. the money supply must fall b.…
A:
Q: C2. | Consider a closed demand-determined economy with fixed prices and wages. Consumption depends…
A: Slope of IS curve is determined by taking goods market equilibrium equation in the form of Y in…
Q: If the MPC = .8, a $200 tax cut causes the Aggregate Demand Curve to shift to the right by -$800…
A: Tax multiplier: - it is a fraction that shows the magnitude of the change in national income due to…
Q: Crowding out occurs when expansionary fiscal policy leads to O a higher money supply and a reduction…
A: Answer- Need to find- Crowding out occurs when expansionary fiscal policy leads to Evaluating the…
Q: The use of government purchases (G) as a fiscal policy tool can have an effect on long-run growth in…
A: Government purchase is also known as the government spending on goods and services. The federal’s,…
Q: Which of the following statements is not true? O A decrease in federal income tax rates is an…
A: The statement which is not true is - Option d - when aggregate expenditure exceed real GDP inventory…
Q: All things equal, an autonomous increase in the budget government purchases causes deficit function.…
A: Government spending is considered to be independent of the gross domestic product (GDP) level, which…
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Q: The formula for the tax multiplier is Select one: O a. -MPC/(MPC+ 1). O b. MPC/ (1 + MPC). O c.…
A: Tax multiplier refers to the amount of tax multiplied or increased out of the fiscal policy…
Q: Which of the following statements in completely true about automatic stabilizers Select one: O a.…
A: The business cycle depicts the different phases of economic growth over a period of time, i.e.,…
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A: Large federal budget deficits are dangerous to the fiscal health of the Canadian federal government.…
Q: An expansionary fiscal policy shifts the aggregate demand curve O to the right and is used to close…
A: The expansionary fiscal policies will raise the AD in the economy by lowering the taxes and rising…
Q: Supply-side edonomists argue that Supply and secure economic prosperity. on businesses (or…
A: Aggregate supply is the overall production of goods and services that is available in a particular…
Q: Which of the following statements is true of government spending? O An increase in government…
A: In the mentioned question, government spending is asked and its relation with the aggregate demand…
Q: What is the role of aggregate demand in eliminatingthe GDP gap? How does the slope of the AS…
A: GDP gap: it means the difference between potential GDP and equilibrium level GDP.
Q: In each of the following cases, either a recessionary or inflationary gap exists. Assume that the…
A: (a) Real GDP = $100 billion Potential Output = $160 billion Real GDP is less than potential output…
Q: h of the following are arguments in favour of active stabilization policy by the government? Check…
A: DISCLAIMER “Since you have asked multiple question, we will solve the first question for you. If you…
Q: Which fiscal policy expects the economy to self-adjust? O balanced budget O counter-cyclical O…
A: Fiscal Policy is the policy in which taxes and government spending is used for influencing economic…
Q: A given change in taxes shifts the aggregate demand curve by than an equal change in government…
A: We know that the Government Spending Multiplier = 11- MPC and the Tax Multiplier = MPC1 - MPC
Q: Suppose the equilibrium level of income exceeds the full employment level of income and there is…
A: To reduce the price and output in an economy to control the higher inflation. The government needs…
Q: Golden Age of fiscal policy is has all of the following, except: O under 2 percent inflation rate O…
A: The policy that uses the collection of revenue by the government through taxes or cutting back taxes…
Q: How large a tax cut would be needed to achieve the same increase in aggregate demand? $ 13 bilion b.…
A: In economics, the marginal propensity to consume is a metric that quantifies induced consumption,…
Q: he AS curve shifts to the left when O All listed options are correct. O the cost of production rises…
A: Supply curve has a direct relationship with price of the good.
Q: Assume an economy where the government embarks on an expansionary fiscal policy, explain the effect…
A: The IS curve shows all the combinations of income level and interest rate level at which goods…
Q: If the marginal propensity to consume is then the government spending multiplier is 3. True O False…
A: Income is split in two category - MPC and MPS either person consume or save and the level of…
Q: Equal increases in government purchases and in net taxes have equal but opposite effects on the…
A: Gross Domestic Product or GDP is a statistical measure used to calculate the total money value of…
Q: Expansionary fiscal policy to prevent real GDP from falling below potential real GDP would cause the…
A: Expansionary fiscal policy to prevent real GDP from falling below potential real GDP would cause the…
Q: Question 7 If the MPC in the economy is 0.75, govemment could shift the aggregate demand curve…
A: 7. Here, it is given that the MPC is 0.75. the value of MPC can be used to compute the spending…
Q: Quèstion 16 If the MPC in the economy is 0.75, government could shift the aggregate demand curve…
A: If MPC is 0.75, the value of multiplier in an economy would be: =1/(1-MPC) =1/(1-0.75) =4
Q: Compute the amount the government would have to increase spending to close the output gap according…
A: Fiscal policy is the use of government spending and taxation to influence the economy.. Fiscal…
Q: The balanced-budget multiplier Select one: O a. is greater than 1. O b. is greater than 0 but less…
A: Balanced Budget Multiplier refers to a situation when change in government expenditure is equal to…
Q: The government budget constant for an economy is given below: G + TR; + rD-1-T; = D¿ – D¿-1 where G…
A: Gt+TRt+rDt-1-Tt=Dt-Dt-1Gt+TRt+rDt-1=(Dt-Dt-1)+TtGt=government spendingTRt=Transfer…
Q: The effects of a combined policy of fiscal expansion and monetary contraction will result in: A…
A: The monetary policy is the policy of the central bank regarding the money supply. The tools used…
Q: An advantage of automatic stabilizers over discretionary fiscal policy is that O automatic…
A: Correct : automatic stabilizers are not subject to the same time lags as discretionary fiscal policy…
Q: According to Keynesian analysis, the adoption of an expansionary fiscal policy will result in: O an…
A: Fiscal policy is a policy that the government uses to influence the economy. It aims at certain…
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- Suppose the federal government gives taxpayers a tax cut financed by borrowing. If taxpayers their debts, total spending will: O decrease. O first increase and then decrease. O increase. O remain unchanged.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?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.
- Hi this question is for macroeconomics but on bartleby does not show any option for macroeconomics As a result of COVID-19, the Government of Canada has been actively using a discretionary fiscal stimulus policy. Using the Aggregate Supply – Aggregate Demand model, illustrate the intended impact of this policy on Aggregate Demand. Has the fiscal stimulus policy been effective? Why or why not? When the discretionary fiscal stimulus policy has ended, what actions with respect to the budget, will the government have to consider to address the debt level resulting from the discretionary fiscal stimulus policy?If the government were to try to offset surplus years with deficit years over the business cycle, this would result in O A. a reduction in investment capital. O B. a higher debt-to-GDP ratio. OC. an annually balanced budget. O D. a structurally balanced budget. O E. a cyclically balanced budget.2. Suppose the economy is in recession. Policymakers estimate that aggregate demand is$100 billion short of the amount necessary to generate the long run natural rate of output.That is, if aggregate demand were shifted to the right by $100 billion, the economy would be inlong run equilibrium.a. Explain the impact on the economy if the government chooses to use fiscal policy to stabilizethe economy and the marginal propensity to consume (MPC) is given as 0.75 with no crowdingout.b. If there is a crowding out effect and investment is very sensitive to changes in the interest rate,should the government increase spending more or less than this amount?
- consumers increased consumption by a relatively small amount in 2008 and 2009 because thet believe the tax cuts temporary. true or falseSuppose a closed economy with no government spending which in equilibrium is producing an output and income of 2500. Suppose also that the marginal propensity to consume is 0.80, and that, if at full employment, the economy would produce an output and income of 3900 By how much would the government need to cut taxes (T) to bring the economy to full employment?pls answer urgent all question Q1,a,b,c . Q1-Suppose the government reduces taxes by $20 billion, that there is no crowding out, and that the marginal propensity to consume is ¾. a. What is the initial effect of the tax reduction on aggregate demand? b. What additional effects follow this initial effect? What is the total effect of the tax cut on aggregate demand? c.How does the total effect of this $40billion tax cut compare to the total effect of a $40 billion in governmentpurchases? Why?
- Create three diagrams for the aggregate expenditures (AE) model for a public closed economy by adding different taxes. For the Diagram #1 suppose: Autonomous Expenditures: $6000; MPC: 0.75 Taxes: $1500;Potential Output: $16500For the Diagram #2 suppose: Autonomous Expenditures: $ 6000; MPC: 0.75;Taxes: $3000;Potential Output: $16500For the Diagram #3 suppose: Autonomous Expenditures: $6000; MPC: 0.75; Taxes: $2500Potential Output: $16500Explain each diagram by determining economic gaps and/or equilibriums. How does an increase in taxes affect GDP? How does a decrease in taxes affect GDP?Suppose the government uses a balanced-budget policy, Önancing its expenditure bylump-sum taxes (i.e., G = T) Suppose the government wants to achieve the same output level as in the no-taxcase in 1 (b) above. (output level = 3800)i. Does it have to increase or decrease its expenditure (G) and taxes (T) with G = T , and by how much?ii. What is the value of the balanced-budget multiplier?iii. In the no-tax case in 1 (b); the G-policy can eliminate any trade imbalance(i.e., make NX = 0). Would the government be able to achieve exact tradebalance as well under the balanced-budget policy here? If not, would therebe a trade surplus or trade deficit, and how big is the surplus/deficita) What are the three fiscal policy tools and how would each be used to counter a contractionary gap? b) True or False and explain: Fiscal Policy is effective at reducing the duration of an economic contraction. c) If the spending multiplier is 2.5 and the economy is in a $500 billion contractionary gap, how much should I increase government purchases to eliminate the gap? d) Continuing with c, if the MPC is 0.8, how much would I need to increase transfer payments to eliminate the $500 billion contractionary gap? e) True or False and explain: Households always react to tax changes in a predictable manner. Module 6: Deficits and the Debt. a) Distinguish between deficit and debt. b) Explain what crowding out is and why it reduces the impact of fiscal stimulus. c) True or false and explain: The national debt represents a threat of bankruptcy. (For d and e) Suppose the interest on the debt was $600 billion. If interest is paid domestically, 90% will be spent domestically (the remainder is…
