Should the government fight recessions with spending hikes rather than tax cuts ? Explain

Q: Q11. For various reasons, fiscal policy changes automatically when output and employment fluctuate.…

A: Recession: - it is an economic condition where the overall economic activity declines in an economy.

Q: Who sets fiscal policy?   a. the U.S. Treasury and the U.S. Congress   b. Congress and the…

A: The fiscal policy is the way by which a government adjusts its spending levels and tax rates to…

Q: ) In case of DEFLATION, mention that which particular type of fiscal policy will be used and why and…

A: Deflation: Deflation refers to a situation of overall contraction in economic activities or in other…

Q: Why is a $100 billion increase in government spending on goods and services more expansionary than a…

A: According to the aggregate expenditure model Total income (Y) = Consumption (c +b(Y-Taxes) +…

Q: Explain, using appropriate diagrams, how a rise in the household saving rate can cause a fall in…

A: GDP is the value of final goods and services produced in the country within a given period of time.

Q: One possible fiscal policy solution for a recessionary gap would be O to cut taxes. O to raise…

A: Fiscal policy is a policy used by the government to stabilize the economy from economic ups and down…

Q: In each of the following cases, determine whether the policy is an expansionary or contractionary…

A: In the Keynesian macroeconomic theory, government plays a very important role in stabilizing the…

Q: Chapter 11 shows that increased government purchases, with taxes held constant, can eliminate a…

A: Recessionary Gap: The term recessionary gap refers to the economic situation when the real GDP of…

Q: Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending…

A: NASA is maintained and managed by the U.S government and the universities are maintained by the…

Q: How will a contractionary fiscal policy affect a budget deficit? A.) Debts will…

A: Budget deficit refers to the amount of expenditure of a government that surpasses/exceeds the total…

Q: DEFINE FISCAL POLICY. WOULD THE INCREASE OF $100 IN GOVERNMENT SPENDING HAVE THE SAME EFFECT ON GDP…

A: Fiscal policy is known as stabilizing policy in which government changes government spending or…

Q: If taxes (T) increase, total expenditures decrease. In what direction does the demand curve shift?…

A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…

Q: Why Krugman believe that fiscal austerity in france or more generally in Europe would fail?

A: Fiscal austerity is used to define the steps or the direction taken by government which leads to…

Q: Question: Which of the following is an example of a fiscal policy that has no inside lag? a- A…

A: Fiscal policy- there is a change in government expenditure and taxes to impact the money supply.…

Q: Along any given IS curve: a. government spending is fixed, but tax rates vary. b. tax rates are…

A: IS-LM stands for "investment savings-liquidity preference-money supply," or "investment…

Q: Explain how a progressive income tax system works as an automatic stabilizer in the economy during a…

A: Progressive income taxation is a type of taxation in which the tax rate increases proportionately to…

Q: Some politicians have suggested that the United States enact a constitutional amendment requiring…

A: Balanced budget means that revenues will be equal to the expenditure in a budget. As it is…

Q: Why do Republicans like tax cuts? Why are tax cuts a good thing? How does it affect the aggregate…

A: Answer -  We can not generalise that Republicans like tax cut or not but long line of US presidents…

Q: If a recession persists due to nominal wage and price stickiness (i.e., slow adjustment of nominal…

A: Fiscal policy is set by the government which shows the changes in government spending or taxes.…

Q: If the economy is in a recessionary period how, specifically, might the government use their three…

A: Recession is defined as a period of economic slow down. Recession is characterized by consequent…

Q: Consider an economy with the following situation: C = 50 +0.8 Yd  I=100;T= 100 G =150   a. To…

A: Aggregate expenditure is the sum of consumption, investment and government purchases.  AE = C + I +…

Q: Which of the following is an example of fiscal policy? Select an answer and submit. For keyboard…

A: Fiscal Policy refers to the measures employed by the governments to stabilize the economy of the…

Q: What is fiscal multiplier?

A: Formula for fiscal Multiplier is Fiscal Multiplier=11-MPC where MPC is marginal propensity to…

Q: Fiscal Policy) Chapter 11 shows that increased government purchases, with taxes held constant, can…

A: When a country's actual GDP is lower than its GDP at full employment, this is known as a recession…

Q: Why does a $100 billion dollar increase in government spending increase output by more than $100…

A: The multiplier indicates that the number of times income increases by increasing government…

Q: When the economy is in a recessionary mode, what will likely be the actions by government using…

A: In recessionary mode, the government pursue the expansionary fiscal policy which has two tools which…

Q: Country D experiences a recession due to a decrease in consumer confidence. There are two…

A: Decline in consumers confidence results in decline in demand for consumer goods, thus there would be…

Q: Fiscal Policy) Was fiscal policy effective when the U.S. economy was experiencing stagflation during…

A: Fiscal policy is the policy used by government to stabilize the economy in the business cycle. The…

Q: Automatic stabilizers are increases in spending and reductions in taxes that__ ?which one? a.Are…

A: According to Keynesian macroeconomics, the change in aggregate demand is able to affect the output…

Q: (Fiscal Policy) Chapter 11 shows that increased government purchases, with taxes held constant, can…

A:

Q: What kind of fiscal policy will you use to fight against inflation. Explain it briefly.

A: Fiscal policy refers to changes in the federal government purchases and taxes, which are intended to…

Q: What should be done to combat inflation or an economy that is growing too quickly using fiscal…

A: Answer: When an economy is experiencing inflation or growing too quickly then the contractionary…

Q: Compare two fiscal policies: a tax cut on income or an increase in government spending on roads and…

A: FP is a tool of government to stimulate the economy. It includes government expenditure and taxes,…

Q: Suppose a government has a tax revenue shortfall. Will hyperinflation inevitably follow unless the…

A: Hyperinflation is a term used to define a nation's economic abrupt, disproportionate, and…

Q: If this year, the government collects £250bn in taxes and spends £400bn, it must have a  a) budget…

A: In this question, we have to tell whether the economy will have a budget deficit or budget surplus…

Q: In February 2021, retail sales fell by 3.3% compared to January. What does the drop in retail sales…

A: " Since you have posted a question with multiple sub-parts, we shall answer the first sub-parts . To…

Q: Why tax cuts can increase both aggregate demand and aggregate supply?

A: In an economy, taxation refers to one of the government tools to influence a market situation and to…

Q: To combat inflation, the federal government could apply which fiscal policy? decrease government…

A: Fiscal policy refers to changes in government spending and taxes.Monetary policy refers to changes…

Q: 14 MULTIPLE SELECT: If the government decides to pursue a expansionary policy, which of the…

A: An expansionary fiscal policy aims to increase the Aggregate demand by decreasing taxes and…