The tax multiplier is always more effective in stimulating the economy than government multiplier because tax cut give people more incentives to spend. TRUE OR FALSE

Q: what will happen to the aggregate demand If government purchases increase by $100 billion, and the…

A: Aggregate demand (AD): - It is the total demand of goods and services in an economy at a particular…

Q: Fiscal policy is conducted by the government and aims at boosting the economy; which of the…

A: The economies around the world have various entities, which are considered to be decision makers,…

Q: Which of the following illustrates the effectiveness lag? A.Policymakers implement contractionary…

A: Effectiveness lag can be understood as when the policy is implemented or any change in policy is…

Q: Which of the following would be an expansionary fiscl policy? Placing a limit on government…

A: Fiscal policy refers to the use of government expenditure and tax policies to manipulate economic…

Q: Explain and show the consequence for fiscal policy if the marginal propensity to consume is a…

A: Fiscal policies are the public authority made approaches made to control, fortify and support the…

Q: The average propensity to consume of a person is 0.6 and the marginal tax to consume is also 0.6.…

A: Average propensity to consume (APC) = 0.6 Average propensity to save (APS) = ?

Q: f the consumption function is C= 800 +0.6(Y-T), output, Y = $4,600 and net taxes, T, = $100, then…

A: here we calculate the consumption by using the consumption function so the calculation of the…

Q: A short-run AS/AD economy has an AS/AD spending multiplier of 2.0 and an income tax rate of t = 0.3.…

A: Spending multiplier refers to the multiplier effect of change in spending on the total output.…

Q: Suppose that real GDP for an economy is currently 16,000 billion, the government purchases…

A: Fiscal policy refers to the actions taken by the government to intefere in the economic activity and…

Q: Will a discretionary fiscal policy action that involves spending $100 billion have the same overall…

A: The discretionary fiscal policy refers to changes in the tax rate or the level of government…

Q: If the MPS in an economy is 0.4. What is the government spending multiplier? Group of answer choices…

A: In an economy, there used to be a proportionate link between economic factors that helps to…

Q: Fiscal policy of increasing government expenditures can be more potent than monetary policy in…

A: Fiscal policy works through changes in government expenditures and changes in taxes, while monetary…

Q: suppose the government wishes to illuminate recessionary GAP of 100 billion and the  MPC is .75. How…

A: The multiplier shows the change in real GDP as a result of a change in the autonomous expenditure.…

Q: An example of a fiscal policy designed to increase real GDP is a. a cut in taxes. b. an increase in…

A: Fiscal policies are designed to influence the aggregate demand, which further leads to affect the…

Q: If the marginal propensity to consume is equal to 0.8, and the government injects $50,000,000 of…

A: Given  MPC = 0.8 Government injected $50,000,000

Q: If the MPC is 0.9, the the government spending multiplier is:  a. 0.1 b. 1.11 c.9 d. 10

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

Q: Which of the following is NOT a fiscal policy action? Group of answer choices decreasing government…

A: Fiscal policy is used by governments that have an economic influence. Changes in taxation and…

Q: TRUE/FALSE When talking about tax multipliers using tax rates instead of the more simple lump sum…

A: Tax multiplier refers to the economic methods to compute the change in the aggregate demand by the…

Q: An increase in government spending will likely cause which of the following? An increase in the…

A: The macroeconomic equilibrium in an economy is determined by the aggregate demand and aggregate…

Q: One of the arguments against using fiscal policy is __________. Group of answer choices tax cuts…

A: The case against discretionary fiscal policy rests on two arguments: First, the possibility of…

Q: If the multiplier is 4 and a change in government spending leads to a cumulative $500 million…

A: The multiplier can be defined as the number which denotes the proportionate increase in income due…

Q: If the marginal propensity to consume is 0.9, then the tax multiplier will be: Group of answer…

A: Here, it is given that the marginal propensity consume of an economy is 0.9 due to which a change in…

Q: The marginal propensity to save is 0.2 and the proportional rate of tax is 0.4. The multiplier of…

A: The sum of marginal propensity to consume and marginal propensity to save is 1.

Q: What happens to the real GDP if the government increases spending by $50 million and the government…

A: The government multiplier = 1.5 Government spending = $50 million

Q: The government spends an additional $926 billion and the marginal propensity to consume is 66%. How…

A: According to the question, it is given that : The government spends an additional $926 billion The…

Q: Explain how MPC and the multiplier effect would impact a government’s attempt to stimulate its…

A: The government in the fiscal policy either increase government purchases spending or decreases the…

Q: How relevant is the multiplier concept to the implementation of expansionary and contractionary…

A: Spending multiplier: - it is a fraction that shows the magnitude of the change in national income…

Q: Which of the following is true?   a.  All economists agree that the tax multiplier is smaller than…

A: Government spending multiplier = ratio of change in income/ratio of change in government spending.

Q: In the 2009 stimulus package, Congress included tax cuts as well as changes in government spending.…

A: Several tax increases were debated as part of the debate about economic stimulus in the aftermath of…

Q: Suppose the government implements contractionary fiscal policy. As a result, the inflation rate will…

A: Actions by the government to either expand or tighten the economy, are under the “fiscal policy”,…

Q: Which of the following is an example of an automatic stabilizer? Discretionary spending A new tax…

A: Automatic stabilisers are a sort of fiscal policy that works automatically to smooth out…

Q: The multiplier effect occurs when: Group of answer choices a. the planned spending in the economy…

A: The multiplier effect occurs when an initial change in autonomous spending led to a greater final…

Q: If MPC = 0.5, a simultaneous increase in both taxes and government spending of $20 will a. decrease…

A: The pending multiplier denotes the ratio of change in the real GDP to the change in the initial…

Q: If government spending rises by £500 million in an economy where the marginal propensity to spend is…

A: Marginal Propensity to spend or consume (MPC) represent that proportion of increase in income that…

Q: Suppose, government is undertaking expansionary fiscal policy because of recessionary concerns. How…

A: The fiscal policy of the government would result in the policies of the government involving…

Q: Calculate the fiscal multiplier if the marginal propensity to save is 0.2.

A: Marginal Propensity to Save = 0.2 Fiscal Multiplier = -MPCMPSor Fiscal multiplier = -MPC1 - MPC

Q: Explain carefully why the tax multiplier is negative and why it is smaller in absolute value than…

A: There exist an inverse relationship between taxes and the level of output or GDP. This is because a…

Q: Which of the following is NOT an undesirable side-effect of discretionary fiscal policy?      A)…

A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…