Q22 Question 22Expansionary fiscal policy involvesO increasing government purchases or decreasing taxes.increasing taxes or decreasing government purchases.O increasing the money supply and decreasing interest rates.O decreasing the money supply and increasing interest rates.

Fiscal policy is a macroeconomic policy that is implemented by the government for monitoring and…

Answered: Question 22 Expansionary fiscal policy…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.1P

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Similar questions

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?
Explain how automatic stabilizers work, both on the taxation side and on the spending side, first in a situation where the economy is producing less than potential GDP and then in a situation where the economy Is producing more than potential GDP.
Under what general macroeconomic circumstances might a government use expansionary fiscal policy? When might it use contractionary fiscal policy?
What would happen if expansionary fiscal policy was implemented in a recession but, due to lag, did not actually take effect until after the economy was back to potential GDP?
What is the main advantage of automatic stabilizers over discretionary fiscal policy?
Explain the difference between the government purchases multiplier and the net tax multiplier. If the MPC falls, what happens to the tax multiplier?
Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below and sketch a diagram using aggregate demand and aggregate supply curves to illustrate your answer: A recession. A stock market collapse that hurts consumer and business confidence. Extremely rapid growth of exports. Rising inflation. A rise in the natural rate of unemployment. A rise in oil prices.
How would a balanced budget amendment change the effect of automatic stabilizer programs?
Have the spending and taxes of the U.S. federal government generally had an upward or a downward trend in the last few decades?

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Question 22 Expansionary fiscal policy involves O increasing government purchases or decreasing taxes. O increasing taxes or decreasing government purchases. O increasing the money supply and decreasing interest rates. O decreasing the money supply and increasing interest rates.