Under what condition would crowding out not inhibit long-run economic growth? Under what condition would crowding out impede long-run economic growth?

Q: Suppose that there are no crowding out effects and the MPC is .7. By how much must the government…

A:

Q: C = 1,600 + 0.8(Y – T)                         I = 1000                         G = 1,800…

A: C = 1,600 + 0.8(Y – T) I = 1000  G = 1,800                 X = M = 0 T =  3,000 + 0.01Y

Q: When an economy is already at full employment, what is the outcome of expansionary fiscal policies…

A: The fiscal policy is an automatic stabilizing policy in which the government either use it spending…

Q: If the economy above was at point D, a good thing to do would be to increase government spending.…

A: Increasing government spending or reducing government spending to energize a sluggish economy,…

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: Can government spending that causes crowding out be detrimental to long-run economic growth?…

A: Economic expansion is defined as an increase in the total output of an economic system. Economic…

Q: If the marginal propensity to consume is 0.2 and the government increases its spending by ¥1…

A: Marginal propensity to consume is 0.2 => MPC = 0.2 ----------------- Spending multiplier = 1 / (1…

Q: Suppose that the economy is slumping into recession and needs a fiscal-policy boost. Voters,…

A: Fiscal Policy deals with government spending and changes in tax rates where as monetary policy…

Q: Which of the following is true according to mainstream economics? If a balanced budget amendment to…

A: Many prominent economists do not believe that a balanced budget is necessary to address the US…

Q: Does MPC matter when using taxes to stimulate the economy in the short-run?

A: The stimulation of the economy using taxes involves fiscal policy. The expansionary/contractionary…

Q: ssess the following statements: 1. At any moment in time, households (in aggregate) demand a greater…

A: Statements 1) 1st statement is true because when the interest rate is lower then firms wants to…

Q: Which of the following statements about how fiscal policy should most appropriately be used in a…

A: The fiscal and monetary policies are used by the governments to achieve certain economic goals. The…

Q: Which of the following are ways for domestic governments to raise capital for spending? Please…

A: Government raises capital from various sources . Government spending is done for social welfare for…

Q: True or false? A fiscal policy is ineffective in a situation of perfect mobility of capital.

A: The use of government spending and tax policies to impact economic conditions, particularly…

Q: Suppose the US Federal Government decides to increase its spending without issuing debt by raising…

A: Economy is at the natural level if the GDP is at the potential level, inflation is at the expected…

Q: Can government spending that causes crowding out be detrimental to long-run economic growth?

A: Crowding out is basically based on the idea that the fiscal policy by the government leads to a…

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…

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: How do the instances when expansionary fiscal policy should be used compare with those for…

A: The use of government spending and tax policies to impact economic conditions, particularly…

Q: What is the best combination of fiscal policies and monetary policies for a country like Japan whose…

A: The aggregate demand (AD) and aggregate supply (AS) model explains the marker equilibrium where the…

Q: Suppose that a certain country has an MPC of 0.9 and an equilibrium real GDP of $500 billion. If…

A: The  Investment Multiplier proposes that the expansion in the Investments will prompt the income…

Q: Explain your decision making regarding government expenditure and how it changed based on the…

A: Fiscal policy is the utilization of government spending and tax collection to impact the economy.…

Q: Which of the following is true according to mainstream economics? If a balanced budget amendment to…

A: Many prominent economists do not believe that a balanced budget is necessary to address the US…

Q: What is Ricardian Equivalence?

A: please find below the answer.

Q: Which of the following is an appropriate fiscal policy response to a negative GDP gap?   a. raise…

A: Fiscal policy is the policy which is implemented by the government of the nation. Hence, charge of…

Q: Which kind of economic fiscal policy measures do you recommend at the current economic situation…

A: Stagflation is defined as a period of poor economic development and relatively high unemployment—or…

Q: According to Keynesians, when should the federal government run a budget deficit and when should it…

A: The use of fiscal policy was made popular by John Maynard Keynes, after whom the Keynesian economics…

Q: What are the costs associated with large volatility in GDP?      bouts of low taxes and high…

A: Gross Domestic Product (GDP) refers to the value of all the goods and services produced inside the…

Q: Suppose in the country of Miltonia, Ricardian equivalence is 100% true. A- If Miltonian tax rates…

A: One of the most commonly used theories of Professor David Ricardo is the concept of comparative…

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: Suppose an economy is hit by a recession and people’s income fall. Show graphically using AD-AS…

A: A recession is said to occur when there is a decline in economic activity for more than six months…

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

A: Government spending and tax reductions have different multiplying effects on the economy.

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 type of policy – fiscal or monetary - do you feel was most impactful 2020? Why?

A: We show that Both monetary ànd fiscal policies are growing naturally as they will focus on…

Q: Some liken quantitative easing to that of directing a firehose of money to emerging economies that…

A: In an economy, action of governement and central bank have significant impact on the behavior of…

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

A: The government uses two types of macroeconomics policy which are fiscal and monetary policy. The…

Q: The classification of government spending as an investment or having an investment-effect depends…

A: The classification of government spending as an investment or having an investment effect can be…

Q: In which cases were tax cuts followed by robust growth? a. the ones of the Kennedy administration…

A: Option (c) is correct.

Q: If taxes are reduced , will most people save more or less than before ? Does national saving rise or…

A: The aggregate spending behaviors of families and public and private substances can swiftly influence…

Q: Hi! Can you help me understand why monetary and fiscal policies are important? macroeconomic tools…

A: 1. Why monetary and fiscal policies are important? 2. Macroeconomic tools used to stimulate…

Economic Growth

It means the rise in the manufacturing levels of a country’s products/services over a while. It is calculated in terms of the real income of the people of the country. When the production of products/services begins, the manufacturers will hire employees, which in turn raises the income of the people and it will also raise the buying power, this eventually leads to the circulation of money that directly helps in the increase in the Gross Domestic Product (GDP). Thus, GDP is calculated by economists to calculate the growth in the country.