Which of the following would be an expansionary fiscl policy? Placing a limit on government expenditures Raising the income tax rate Increasing the corporate tax rate OAn increase in infrastructure spending A decrease in defense spending
Q: In an economy such that: C = 200 + 0.80 (Y- T) I=40 - 20 R X 30 - 0.05 Y T= 100 M =0.20 Y- 10 R M =…
A: The goods market equilibrium is indicated at a point where real GDP is equal to aggregate…
Q: Discuss the difficulty in predicting the effects of discretionary fiscal policy.
A: Fiscal policy is the process through which a government modifies its spending and tax rates in order…
Q: olicy"
A: Resource mobilization is the process of receiving resources from the resource provider with use of…
Q: Most economists have reached the following conclusion about supply-side economics. a. Supply-side…
A: The answer is - c. Supply-side tax cuts are likely to widen income inequality.
Q: Which of the following is an example of an automatic stabilizer? Congress legislates lower tax rates…
A: Automatic stabilizer are such policy tools that automatically adjust as per the need and situation…
Q: By decreasing government spending and aggregate demand, the policy ________ the price level and…
A: When other things remain the constant, decreasing aggregate demand leads to reduce the price level.…
Q: fiscal policy
A: There are two policies which go hand in hand to regulate or stimulate the economy. The monetary…
Q: Under what conditions is expansionary fiscal policy the most effective at increasing output? Why?
A: Expansionary fiscal policy is the policy which is to be used to push back the equilibrium normal…
Q: C = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 1550 Calculate the…
A: Tax revenue is the percentage of the GDP (Y) which tells about that share, that is collected by the…
Q: Which of the following is NOT a fiscal policy action? Group of answer choices decreasing government…
A: Fiscal policy is used by governments that have an economic influence. Changes in taxation and…
Q: Which fiscal policy would make a budget surplus smaller or a budget deficit larger? lower government…
A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…
Q: TRUE/FALSE According to the Laffer curve, increases in tax rates always result in less tax revenue.
A: Laffer curve shows graphically the relationship between tax rate and tax revenue.
Q: Refer to columns 1 and 6 in the table below. a. Incorporate government into the table (in the…
A: Answer: (a). Aggregate expenditures, Private open economy, Billions Government expenditures,…
Q: Is supply-side policies have been successful in improving the performance of an economy regarding…
A: The theory that expanded demand drives economic growth is supply-side economics. Money, labor,…
Q: Using the government expenditure multiplier from the simple model presented in the chapter, the plan…
A: To find whether plan-A will help congress achieve its goal or plan-B, we use the…
Q: What is the Laffer curve. Graphically show how to increase the tax revenue.
A: The economies around the world tend to operate with the motive of increasing their growth, and…
Q: C = 450 + 0.4Y |- 350 G = 150 X= 70 Z= 35 + 0.1Y T= 0.15Y Yf = 1550 Q.2.4 Calculate the tax revenue…
A: Gross domestic product (GDP) refers to the total value of all the finished goods produced within the…
Q: Which is considered expansionary fiscal policy? a)a tax increase for wealthy individuals b)an…
A: Fiscal Policy is the use of tax policy and the government expenditure that can influence the…
Q: Question: Given the following model for an economy C= 100 + 0.8Yd G= 800 T= 500 T= 200 d) Find Tax…
A: Given, C = 100 + 0.8Yd G = 800 T = 500 I = 200
Q: T F Fiscal policy determines the level of interestrates.
A: Fiscal policy refers to the taxation and expenditure decisions of the government that influences a…
Q: Explain why implementation lag for fiscal policy is longer than monetary policy.
A: Fiscal Policy Monetary Policy The fiscal policy is the use of government revenue (taxes or tax…
Q: C = 450+0.4y I = 350 G = 150 X = 70 Z = 35+0.1y T = 0.15y Yf = 1550 - Calculate the…
A: Answer: Given: C = 450+0.4y I = 350 G = 150 X = 70 Z = 35+0.1y T = 0.15y Yf = 1550 Calculation: (1).…
Q: What is fiscal imbalance? Fiscal imbalance is the _______ value of the government's commitments…
A: What is the fiscal imbalance? Fiscal imbalance refers to a situation where all of the government's…
Q: Tools ofmonetary policy and fiscal policy?
A: Monetary policy is the macroeconomic policy used by central bank in order to affect money supply and…
Q: Which of the following would be classed as an expansionary fiscal policy? An increase in the money…
A: An expansionary fiscal policy is a policy from government to expand aggregate demand without any…
Q: Which of the following sources of revenue is used to fund government spending? A) corporate…
A: Government expenditure is the amount of money allocated by the public sector for the acquisition of…
Q: Which of the following can tax cuts influence? a. aggregate demand and aggregate supply b.…
A: Answer - Need to find - Which of the following can tax cuts influence Evaluating the options:- a.…
Q: Given the above model for an economy C = 100 + 0.8Yd G = 800 T = 500 I = 200 c)Find Tax…
A: c) Tax multiplier = MPC / 1- MPC = 0.8 / 1- 0.8…
Q: Define Ricardian Equivalence theorem. Also explain:…
A: Aggregate demand refers to the total demand for goods and services in an economy. AD=C+I+G+X-M…
Q: 6. Changes in taxes The following graph shows the aggregate demand curv Shift the aggregate demand…
A: When there is a fall in the tax rate in the economy, people are left with more disposable…
Q: The following is information for the economy of Texas, where taxes are wholly autonomous: C = 40 +…
A: The level of income can be calculated through the expenditure method by taking the consumption,…
Q: C = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 1550 Q.2.5 Calculate…
A: Given : C = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 1550
Q: Match each of the following with the appropriate Fiscal Policy Should be used when Unemployment is…
A: In an economy, governement uses contractionary fiscal policy when it wants to decrease income level…
Q: Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in…
A: Expansionary Policy: Expansionary monetary arrangement incorporates tax breaks, move installments,…
Q: ich of the following is NOT the limitation to the use of discretionary fiscal policy to stabilize…
A: Discretionary fiscal policy is deliberate changes in the tax and expenditure policy of government.…
Q: Which of the following statements is correct? A decrease in the size of a tax always decreases…
A: Deadweight loss refers to the situation where the increase in price reduces the total surplus in the…
Q: f the following would constitute a supply-side economic policy for raising employment? a)…
A: Supply-side economic policy seeks to increase productivity thereby raising the level of supply or…
Q: If the MPS in an economy is 0.2. What is the tax multiplier? Group of answer choices a. 4 b. 5 c. -4…
A: Tax multiplier = - (1 - MPS) / MPS = - (1 - 0.2) / 0.2 = - 0.8 / 0.2 = - 4
Q: Since 1969, the U.S. federal government had a budget surplus On the late 1980s Oin the late 1970s…
A: The budget surplus of the government is the situation when the income earned is greater than its…
Q: Define fiscal policy and explain the role of income taxes and government spending as fiscal policy…
A: Meaning of Fiscal Policy: The term fiscal policy refers to the situation under which the…
Q: Refer to the photo below. What is the equilibrium level of income for this economy if Y = C + I + G…
A: The aggregate expenditure would be equal to the output in the Keynesian model. The Keynesian model…
Q: which of the following individuals would most likely favor an increase in government spending, as…
A: a and d would be opposed to tax cut.
Step by step
Solved in 2 steps
- Which of the following would be an appropriate fiscal policy to close a recessionary gap of $100 billion assuming an MPC of 0.80? (A) Increase government expenditures by $20 billion. (B) Decrease government expenditures by $100 billion. (C) Decrease personal income taxes by $20 billion. (D) Increase personal income taxes by $20 billion. (E) Purchase $20 billion in government securities in the open market.What is the effect on savings of a tax cut of $15 billion? Is this inflationary or deflationary? Assume that the MPC is 0.9.What is the spending multiplier for the north laurisian economy
- How 'Automatic Fiscal Stabilisers may work within the UK economy. Outline any problems that may arise when automatic stabilisers begin to take effectAssuming you are the Minister of Finance and Economic Planning for Nigeria, in charge of Fiscal Policy. The Research Director of the Ministry brought you the following data on Nigeria’s for the previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021, households in Nigeria saved 20% of their disposable income (Yd) and spent the rest on consumption. In addition, ₦5,000.00 was spent on Consumption expenditure (C), which is independent of income and Gross Private Investment (I) was ₦ 7,000.00. Total Government expenditure (G) which stood at ₦8,000.00 was supposed to be financed by a lump sum tax of ₦2,000.00 (independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood at ₦2,500.00. In addition, the country’s import (M) during the previous fiscal year comprises of ₦1,000.00 which was independent of the country’s national income and 10% which was dependent of the country’s national income. Given these data on…How much government spending needs to be increased to maintain full employment in the economy if the economy was facing recessionary gap of $800 billions? Assume MPC is .8. How much tax cut should government give if they wanted to eliminate this recessionary gap through tax cut
- Question #10 - Suppose the government wishes to eliminate an inflationary gap of $100 billion and the MPC is 0.50. How much must the government cut its spending? Instead of decreasing government spending by the amount you calculate, what would be the effect of the government increasing taxes by this amount?Suppose the MPC is 0.85. If government purchases increase by $10 billion and net taxes fall by $10 billion, equilibrium output will a)increase by $10 billion b)increase by $66.7 billion c)increase by $123.3 billion d)increase by $20 billion e)fall by $10 billionIf a tax rate of 1/3 of national income were introduced, what would be the new equilibrium level of national income in the economy outlined above. Show all your workings and explain the mechanisms through which the economy reaches the new equilibrium.
- Compare the impact of a recession that reduces consumer income by 10 percent on the consumption of durable goods and house rentals. Suppose that the income elasticity of demand for durable goods is 1.5 and the income elasticity of demand for house rentals is 0.3. Based on your response, make a policy argument to support through government funding either businesses or house rentals.With reference to 'Automatic Fiscal Stabilisers (AFS) Define what you understand by the term Automatic Fiscal Stabilisers and provide an explanation as to how 'Automatic Fiscal Stabilisers may work within the UK economy. What would be the problems that may arise when automatic stabilisers begin to take effect. Use diagrams if needed.Suppose that the national economy is experiencing a recession with an estimated recessionary gap of $10 billion. Congress is considering the use of fiscal policy to ease the recession, and due to current political sentiments, it has determined that the maximum spending increase the government is willing to support is $3 billion. The government wants to make up the remainder of the recessionary gap using tax cuts. If a spending increase of $3 billion is approved and the MPC is 0.6, by how much will taxes need to be reduced to close the remainder of the recessionary gap?