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A: The gross domestic product(GDP) refers to the market value of all the final commodities(goods and…
Q: In the simple two period model of Chapter 9, we demonstrated lian equivalence. In your own word,…
A: *Answer: Answers Ricardian equivalence Theory- This theory says that finacing government…
Q: Initially, there is no output gap and inflation expectations are 2%. Then, expansionary fiscal…
A: GIVEN Initially, there is no output gap and inflation expectations are 2%. Then, expansionary…
Q: Which fiscal measure should be adopted in correcting inflationary Gap? (A) Reduction in Public…
A: The inflationary gap is the measurement of the gap between the current level of the Gross domestic…
Q: Analyze the effects of a contractionary fiscal policy on IS-LM model and AD-AS model when the labor…
A: The AD-AS model can be identified with the Phillips curve model of price inflation and joblessness.…
Q: Suppose this economy is in long-run equilibrium, as shown in the graph. Consider an exogenous…
A: Is lm model shows the two markets in equilibrium one is goods market which represents by IS . Each…
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A: When government raises its expenditure on investment, it leads to a rise in the aggregate demand in…
Q: Explain why deficit finance of government expenditure may lead to ‘crowding out'
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A: In the U.S the total debt is owed by the federal government of the U.S to treasury security holders.…
Q: The national debt O decreases when the government runs a budget deficit. O is the total amount of…
A: 1.Here answer is “is the total amount of government debt outstanding” National debt is the debt that…
Q: a) What is automatic stabilizer in this context of fiscal policy? Explain with examples
A: (Since you have asked many questions, we will solve the first one for you. If you want any specific…
Q: Suppose a closed economy generates $2900 output and income in equilibrium. Suppose also that the…
A: Output of the economy = $2900 Government expenditure = $400 Lump-sum tax = $200
Q: ne the economy is in short-run macro-equilibrium at E1. If the federal nment engages in expansionary…
A: Fiscal policy is associated with changes in expenditure and taxes so as to alter the AD(aggregate…
Q: ment has increased its spending by RM 80, what is the amou ax that is required so that the…
A: *Answer:
Q: a) Define what are expansionary and contractionary discretionary fiscal policies.
A: Hey, Thank you for the question. According to our policy, we can only answer 1 question per session.…
Q: Real GDP Which fiscal policy action MIGHT the government take to move the economy from Point A to…
A: Fiscal policy is the policy in which government either change his spending or change tax levels for…
Q: 18)What action could the TCMB take to reduce the crowding-out effect of an expansionary fiscal…
A: The fiscal policy is the policy of the government regarding financial matters such as taxation and…
Q: Fiscal policymakers are faced with a $6 trillion dollar inflationary gap and are worried about…
A: Inflationary gap = $6 trillion MPC = 0.9 Change in tax = 0.5 trillion
Q: Show and explain how an expansionary fiscal policy can cause crowding-out effect by using aggregate…
A: Since there are multiple questions posted, we will answer only to the first one.
Q: Given MPC (marginal propensity to consume) = 0.75, if the government implements an expansionary…
A: MPC = 0.75 Tax multiplier = (-MPC/1-MPC) Tax multiplier= (-0.75/1-0.75)Tax multiplier=…
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A: Fiscal drag is the situation in which the economic development or inflation leads to higher tax…
Q: Expansionary fiscal policy refers to (increases, decreases) in government spending or ases,…
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A: Output is below its natural level by $40 million MPC is 0.8 We know, Multiplier = 1/(1-MPC)…
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A: OPTION A is correct. Option B is FALSE as Interest on public debt does not equal GDP. Option C is…
Q: Expansionary fiscal policy refers to (increases, decreases) in government spending or icreases,…
A: Expansionary fiscal policy is used to increase the aggregate demand in an economy, while…
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Q: Assume a government starts with zero debt. This government then runs an annual deficit for 10 years…
A: GIVEN Assume a government starts with zero debt. This government then runs an annua deficit for…
Q: model of an economy with the following equa Yd he fiscal policy multiplier with respect to incon
A: *Answer:
Q: Suppose a closed economy generates $2800 output and income in equilibrium. Suppose also that the…
A: The ‘government deficit’ is the ‘government expenditure’ less ‘government revenue’. The government…
Q: what will be the fiscal deficit when primary deficit is $6800 and rhe interest payment is $150
A: Generally in the given question Primary deficit = $6800 The interest payments = $150 Fiscal deficit…
Q: xplain the supply-side effects of fiscal policy on employment and potential GDP
A: Employment increases when production activities increase in the economy because when producers…
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Q: A government debt is the O accumulation of past deficits minus surpluses O the deficit for the…
A: Government budget is in surplus when government revenue is higher than government expenditure. i.e.,…
Q: 6) Fiscal crowd-out can be avoided by decreasing M when expansionary fiscal shocks are implemented.
A: Note: We are answering the first question out of 6-9 as the exact one was not specified. Please…
Q: What are the Cost and then benefits of contractionary fiscal type in the economy
A: The policy that is used by the government during high phases of growth of the economy is being known…
Q: Assume MPC 0.75. If an initial fiscal restraint of $100 billion is desired, by how much must Round…
A: The measure that depicts a portion of an additional dollar being spent or consumed of income of a…
Q: Assume that the nominal interest rate is 11 percent, the inflation rate is 8 percent, and government…
A: Inflation is the rise in general price level of goods and services over period of time. fisher…
Q: Assume a government starts with zero debt. This government then runs an annual deficit for 28 years…
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when large governemnet budget deficits are financed by _____ hyperinflation occurs
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- What is the main advantage of automatic stabilizers over discretionary 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.What is the main reason for employing contractionary fiscal policy in a time of strong economic growth?
- 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?A government starts off with a total debt of $3.5 billion. In year one, the government runs a deficit of 400 million. In year two, the government runs a deficit of 1 billion. In year three, the government runs a surplus of 200 million. What is the total debt of the government at the end of year three?Consider the often debated crowding-out and crowding-in concepts. Also consider expansionary fiscal policy with respect to increased government (deficit) spending. Describe how the two concepts are different. 2. Which concept do you think makes more sense during a recessionary period?
- Discuss the advantages and disadvantages of fiscal rules. Is fiscal policy in Zambia driven by rules or discretion? Substantiate your answer and put citationsUsing IS/LM diagram explain the likely effects of a fiscal expansion financed bygovernment borrowing on both the domestic interest rate and the level of economicactivityDescribe the characteristics of fiscal policy in the Great Recession. Was it expansionary or contractionary? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- 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 budget deficit of 60 dollars can be eliminated if government spending is reduced by ________ dollars. Round your final answer to two decimal places.A. Differentiate between discretionary fiscal policy and nondiscretionary or built-in stabilization policy. B. When in a recession a government has the option to increase government spending or decrease taxes to stimulate the economy. Discuss which piece of GDP is being targeted when each is used.
