Which of the following defines a fiscal policy? a. Commercial bank policies to stabilize domestic output, employment, and the price level b. World Bank policies to stabilize domestic output, employment, and the price level c. Central Bank policies to stabilize domestic output, employment, and the price level d. Government spending and taxes to stabilize domestic output, employment, and the price level

Which of the following defines a fiscal policy? a. Commercial bank policies to stabilize domestic output, employment, and the price level b. World Bank policies to stabilize domestic output, employment, and the price level c. Central Bank policies to stabilize domestic output, employment, and the price level d. Government spending and taxes to stabilize domestic output, employment, and the price level

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter30: Government Budgets And Fiscal Policy

Section: Chapter Questions

Problem 51P: A government starts off with a total debt of $3.5 billion. In year one, the government runs a...

See similar textbooks

Similar questions

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?
What is the main reason for employing contractionary fiscal policy in a time of strong economic growth?
Under what general macroeconomic circumstances might a government use expansionary fiscal policy? When might it use contractionary fiscal policy?
Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below and sketch a diagram using aggregate demand and aggregate supply curves to illustrate your answer: A recession. A stock market collapse that hurts consumer and business confidence. Extremely rapid growth of exports. Rising inflation. A rise in the natural rate of unemployment. A rise in oil prices.
What is the main reason for employing expansionary fiscal policy during a recession?
Based on the national saving and investment identity, what are the three ways the macroeconomy might react to greater government budget deficits?
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.
Assume there is no discretionary increase in government spending. Explain how an improving economy will affect the budget balance and, in turn, investment and the trade balance.
What is the theory of Ricardian equivalence?
What is the difference between expansionary fiscal policy and contractionary fiscal policy?
What are some of the ways fiscal policy might encourage economic growth?