What is a potential problem with a temporary tax increase designed to increase aggregate demand if people know that it is temporary?

Q: If government policy makers were worried about the inflationary potential of the economy, which of…

A: When government worried about inflation, it can use contractionary fiscal policy to reduce the…

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

A: Deflation occurs when the price level falls in the economy. It is usually when people prefer to hold…

Q: A contractionary fiscal policy shifts the aggregate demand curve leftward. true or false?

A: Fiscal Policy: It refers to the decision of the government regarding spending and taxation.…

Q: please answer the following question: 1. Automatic stabilizers: A) work without the need for…

A: A boom illustrates a phase of elevated or rised growth within a business, market, industry, or…

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: In each of the following cases, calculate the spending multiplier and determine the size and shift…

A: As requested, answering (c) and (d) (c) Multiplier = 1/ MPW  = 1/ 0.35 = 2.857   AD decreases by =…

Q: A tax cut shifts aggregate demand A. by less than the tax cut. B. by the same amount as the tax…

A: (Q) A tax cut shifts the aggregate demand A. by less than the tax cut. B. by the same amount as…

Q: Consider an economy that is operating below the full-employment level of real GDP. What would be the…

A: Meaning of Gross Domestic Product (GDP): The term gross domestic product refers to the situation…

Q: From 2008, how might monetary policy (as reflected in the OCR) have affected the degree of crowding…

A: Monetary policy refers to change in money supply and money demand by central banks through open…

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: Fiscal policy refers to the idea that aggregate demand is affected by changes in   a. the money…

A: Government of a country has power to influence its economy by adopting different tools and policies.…

Q: If the economy is producing in the intermediate zone of the ad/as would you suggest discretionary or…

A: The government of the country takes the help of fiscal policy measures to maintain balance in the…

Q: A cut in taxes will have a greater impact on aggregate demand if it is given to: a. people with a…

A: Marginal propensity to consume shows the change in consumption with respect to change in income.

Q: Assuming the economy is in long run and the govt implemnents a tax cut of $420 Billion, there is no…

A: Here, it is given that the government implements a tax cut of $420 billion in the economy when…

Q: What is the importance of fiscal policy during times of economic recession?

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

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: Suppose the government decides to increase taxes by $30 billion in order to increase Social Security…

A: Social security benefits refer to a pension program in which workers deposit their income during…

Q: what is a potential problem with a temporary tax decrease desighned to increase aggregate demand if…

A: The federal government's tax system depends on a devising a number of taxes in order to generate…

Q: Show the effect of the expansionary fiscal policy according to the new classical view by shifting…

A: Fiscal policy refers to the government policy regarding tax and government spending which stabilizes…

Q: Briefly discuss how time lag could be an argument against policy activism. What is the role of…

A: The government of a nation adopts various policies in order to bring stability in the economy. The…

Q: How fiscal policy influences aggregate demand?

A: Aggregate demand refers to the overall demand for commodities and services in an economy during a…

Q: What is a potential problem with a temporary tax decrease designed to increase aggregate demand if…

A: Tax is the unilateral payment made by the public to the government.

Q: What is the Laffer Curve, and how does it relate to supply-side economics? Why is determining the…

A: Economics include all the possible elements which an economy has in consideration to the discipline.…

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: In mid-2001, the Bush administration won congressional approval for lower income tax rates. One…

A: Supply-side policies are based on the concept that tax cuts for producers and providers of commodity…

Q: What is classes as an expansionary fiscal policy?

A: Fiscal policy is the government-imposed policy used to change economic conditions like demand,…

Q: f you have the power to cut or increase taxes in your country with the aim of boosting aggregate…

A: Aggregate demand has the following components AD = C + I + G + NX  Where, C - Consumption, I -…

Q: From the perspective of someone using aggregate-demand and aggregate supply analysis, what is the…

A: Full employment is the situation where all the resources are fully utilized.

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: What is the difference between an expansionary(inflationary gap) gap and…

A: recessionary gap A recessionary gap occurs when a country's real gross domestic product (GDP) falls…

Q: In each of the following cases, either a recessionary or an inflationary gap exists. Assume that the…

A: Real GDP equals $100 billion, potential output equals $160 billion, and the marginal propensity to…

Q: What is supply-side economics? Does it oppose the Classical, Keynesian, or Monetarist theory? How…

A: Answer:- Suррly-side  eсоnоmiсs  is  а  mасrоeсоnоmiс  theоry  whiсh  аrgues  thаt  eсоnоmiс  grоwth…

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

A: Fiscal policy is used by government to stabilize the economy either in terms of price or 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: In 2006, the U.S. economy experienced an inflationary gap when the economy was booming and the…

A: The AD-AS model would result in the determination of the price level and the equilibrium level of…

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: 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: Does the monetary and fiscal policy have lags? Give your explanation

A: Expenditure lags for fiscal policy and monetary policyMonetary policy takes more time to stabilize…