Which of the following statements about Fiscal Policy is INCORRECT? (a) In order to combat inflation, the South African Reserve Bank must apply a contractionary fiscal policy; (b) A contractionary fiscal policy can result in higher levels of unemployment; (c) Expansionary fiscal policy will increase the budget deficit; (d) The application of fiscal policy will have no effect on aggregate supply in the AD‐AS model.

Which of the following statements about Fiscal Policy is INCORRECT? (a) In order to combat inflation, the South African Reserve Bank must apply a contractionary fiscal policy; (b) A contractionary fiscal policy can result in higher levels of unemployment; (c) Expansionary fiscal policy will increase the budget deficit; (d) The application of fiscal policy will have no effect on aggregate supply in the AD‐AS model.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter15: Fiscal Policy

Section: Chapter Questions

Problem 11SQP

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Which of the following statements about Fiscal Policy is INCORRECT? choose the correct answer(a) In order to combat inflation, the South African Reserve Bank must apply acontractionary fiscal policy;(b) A contractionary fiscal policy can result in higher levels of unemployment; (c) Expansionary fiscal policy will increase the budget deficit; (d) The application of fiscal policy will have no effect on aggregate supply in theAD‐AS model
Explain your decision making regarding government expenditure and how it changed based on the macroeconomic conditions. What was the intent of your fiscal policy decisions in response to the given economic climate? Evaluate your fiscal policy decisions, including how they impacted key macroeconomics factors such as real GDP growth and unemployment. To what extent did your policies yield positive or negative outcomes? Refer to the AD/AS model to support your analysis in this section of your report.
How do the instances when expansionary fiscal policy should be used compare with those for contractionary fiscal policy? Expansionary fiscal policy should be used during recessions to help build the economy and contractionary fiscal policy should be used when there is high inflation. Expansionary fiscal policy should be used to increase government revenue and contractionary fiscal policy should be used to increase consumer spending. Expansionary fiscal policy should be used to combat high inflation and contractionary fiscal policy should be used to increase government revenue. Expansionary fiscal policy should be used to decrease the unemployment rate and contractionary fiscal policy should be used when economic growth is too fast.
Hide student question Time Left : Determine whether each of the following is an example of a situation in which a direct expenditure offset to fiscal policy occurs. a. In an effort to help rejuvenate the nation's railroad system, a new government agency buys unused track, locomotives, and passenger and freight cars, many of which private companies would otherwise have purchased and put into regular use. b. The government increases its expenditures without raising taxes. To cover the resulting budget deficit, it borrows more funds from the private sector, thereby pushing up the market interest rate and discouraging private planned investment spending. c. The government finances the construction of a classical music museum that otherwise would never have received private funding.
Let’s assume that the economy in the United States is higher than the potential GDP. If the government uses a contractionary fiscal policy to decrease GDP, the: Group of answer choices aggregate demand curve will shift to the right. aggregate supply curve will shift to the left. aggregate supply curve will shift to the right. aggregate demand curve will shift to the left.
If the government were to implement a fiscal policy during a case of recession, all of these proposal are in line with the goal of fighting recession EXCEPT lowering income tax increasing government spending and lowering income tax increasing both government spending and income tax increasing government spending When there is a problem of a delay in terms of implementation of the fiscal policy, that would be categorized as _____. execution lag information lag decision lag
The outbreak of COVID-19 pandemic in 2020-21 has had a significant impact on the Australian economy. a) What is the the short-run equilibrium impact on inflation and output of the lockdown that governments imposed? Explain using the AS-AD model with graphs The Australian government implemented fiscal stimulus aimed at supporting households and businesses. b) Describe the key elements of the fiscal stimulus.
Identify one fiscal policy action that could counter the effects identified in part (a). Explain how this policy will affect each of the following. Output Employment The price level
Refer to the above diagram. The economy is at equilibrium at point C. What fiscal policy would increase real GDP? Group of answer choices Increase aggregate demand from AD2 to AD1 by decreasing taxes. Decrease aggregate demand from AD2 to AD3 by increasing taxes. Increase aggregate demand from AD1 to AD2 by increasing government spending. Make no change because the economy is at or near its full-employment level of real output.
If the equilibrium real GDP were higher than potential GDP, then a contractionary fiscal policy would cause the inflation rate to be ________ and real GDP to be ________. a. higher; higher b. higher; lower c. lower; higher d. lower; lower
Several problems of timing may arise in connection with fiscal policy. Which of the following is not one of them? Select one: a. An administrative lag occurs due to a significant lag between the time the need for fiscal action is recognized and the time action is taken by a government. b. Operational lag also occurs between the time fiscal action is taken and the time that action affects output, employment, or the price level. c. Crowding out lag occurs since governments delay to take action for not to crowd out exports. d. The recognition lag is the time between the beginning of recession or inflation and the certain awareness that it is actually happening.
Could the expansionary fiscal policy adopted by the U.S. government lead to economic recovery from the Covid-19 shutdown?