4Which of the following policies did the Fed follow after 2014?O To unwind expansionary policy measures and try to return to a normal stance of policy.O To get the economy out of a recession.O To stimulate the U.S. financial and banking systems.O To lower interest rate in an attempt to stimulate economic growth.O None of these.5The recent use of discretionary fiscal policy was facilitated byO the elimination of the balanced budget amendment.O the ineffectiveness of monetary policy.O changing beliefs among economists about the lags of monetary policy.O the use of automatic policy rules.O the prediction of high rates of unemployment that could otherwise occur in the future ifgovernment did nothing.6For real and potential GDP to be equal, the budget surplus has to be zero.O TrueO False

Which of the following policies did the Fed follow after 2014? To unwind expansionary policy measures and try to return to a normal stance of policy. To get the economy out of a recession. To stimulate the U.S. financial and banking systems. O To lower interest rate in an attempt to stimulate economic growth. None of these.

Which of the following policies did the Fed follow after 2014? To unwind expansionary policy measures and try to return to a normal stance of policy. To get the economy out of a recession. To stimulate the U.S. financial and banking systems. O To lower interest rate in an attempt to stimulate economic growth. None of these.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 15P

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Similar questions

One of the main arguments against using Fiscal Policy is the crowding out effect. Suppose the government uses government purchases to stimulate the economy. Explain quantitative easing? If the Fed’s current policy is quantitative easing, do you think that there is a danger of the government’s current fiscal policy being crowded out? Why or Why not? Explanation required.
d. Macroland implements a combination of expansionary fiscal and monetary policies. What will be the effect of these policies on each of the following?i. Aggregate demand in Macrolandii. The price level in Macroland iii. Explain the effects of expansionary fiscal policies on interest rates inMacroland.iv. Explain the effects of expansionary monetary policies on interest rates in Macroland.
Use AD and AS curves to explain the effects on the equilibrium price level and equilibrium level of output in the short run.(a) An expansionary fiscal policy with the economy operating near full capacity. (b) A contractionary monetary policy during a period of high unemployment and excess industrial capacity. (c) A strong hurricane destroys energy plants which cause energy prices to increase, assuming that the Fed attempts to keep interest rates constant by accommodating inflation. (d) The federal government pursues a contractionary fiscal policy while the Fed acts to keep output from falling.
Expansionary fiscal policy refers to the ________ to increase real GDP. A. Federal Reserve's increasing the money supply and decreasing interest rates B. government's increasing spending and lowering taxes C. Federal Reserve's decreasing the money supply and increasing interest rates D. government's decreasing spending and raising taxes
According to the Keynesians, the demand for money depends on income and interest rate. The liquidity trap occurs because the interest rate is so very low and everyone expects it to rise. Please draw and explain whether the fiscal policy is effective or not when there is liquidity trap.
The second-round effects of expansionary Fiscal Policy when the FED has a binding zero interest rate policy are: a) decrease in investment, shift down of AE (aggregate expenditure) and decrease in income. b) increase in income, increase in money demand and no change in the interest rate. c) none of the listed options. d) no change in investment, no shift of the AE and no change in income. e) increase in investment, shift up of AE and increase in income.
4. Summarize the fiscal policy responses to the 2008 financial crisis and the 2020 pandemic. Explain howthey are similar and how they differ. Evaluate the extent to which the fiscal responses have been successful(or not) in both crises, providing evidence or economic arguments to support your views. What would youhave done differently? Explain your answers thoroughly. 5. Summarize the monetary policy responses to the 2008 financial crisis and the 2020 pandemic. Explainhow they are similar and how they differ. Evaluate the extent to which monetary policy has been successful(or not) in both crises, providing evidence or economic arguments to support your views. What would youhave done differently? Explain your answers thoroughly. Please answer all! I need to check my work!
What is the advantage of monetary policy over fiscal policy? O. Monetary policy can be implemented faster than fiscal policy O. Once implemented, the effect of monetary policy can be realized faster than fiscal policy O. The monetary policy affecting Investment category, which is more flexible than the Consumption and Government expenditure category O. Monetary policy is more effective at reducing the recessionary/inflationary gap
Suppose a wave of negative “animal spirits” overrunsthe economy, and people become pessimistic aboutthe future. To stabilize aggregate demand, the Fedcould _________ its target for the federal funds rateor Congress could _________ taxes.a. increase; increaseb. increase; decreasec. decrease; increased. decrease; decrease
Suppose the government undertook a fiscal policy by increasing government expenditure by 20 percent. Clearly demonstrate how this would result in the crowding out phenomena.c. Suppose the instead of fiscal policy, the government, through its monetary authority undertook an expansionary monetary policy by increasing nominal money supply by 20 percent. Clearly demonstrate how this would result in the crowding in phenomena.
The following parameters describe the structure of a hypothetical economy: Autonomous consumption=240 Autonomous investment=1000 Autonomous taxes=100 Autonomous government expenditure=400 Real money supply (M/P)=600 Tax rate=0.25 Marginal propensity to consume=0.8 Interest elasticity of investment=50 Interest elasticity of demand for money=62.5 Income elasticity of demand for money=0.25 a) Determine and explain the relative effectiveness of fiscal and monetary policies and State the values of the fiscal and monetary policy multipliers if the economy is in a liquidity trap. Explain. b) Use your answer in part a) above to determine equilibrium income and interest rate. c) If government expenditure is increased by 150 units, show how equilibrium interest rate and equilibrium income will change. Can you determine the extent to which investment is crowded out as a result? Explain.
ONLY answer! NO explanation! 1. The federal funds rate is:a) the rate at which the Fed lends money to commercial banksb) the rate at which consumers borrow money form commercial banksc) the rate at which one commercial bank borrows money from another commercial bankd) the rate at which investors borrow money from the Fed 2. Which of the following statement is true?a) Investment tax incentive increases investment, which increases productivity growth and living standards in the long run.b) Budget deficit reduces investment, which reduces productivity growth and living standards.c) Both investment tax incentive and budget deficit causes net exports to falld) all of the above 3. Which of the following caused a trade deficit in the USA during 1990s?a) Although national saving increased in the 1990s, investment increased even at a faster rate.b) Slowdown in national savings but a rapid increase in investment.c) Huge government deficit.d) An increase in government spending. 4. Let the govt.…