Which of the following would be classed as an expansionary fiscal policy? O A. An increase in the money supply O B. A reduction in the number of goods exempted from VAT An increase in government taxation O D. An increase in government expenditure
Q: Which of the following is an appropriate discretionary fiscal policy if equilibrium real GDP falls…
A: Fiscal policy is a policy used by the government to stabilize the economy. It uses taxes and…
Q: Suppose that the MPC is 0.80 and there is an AD excess of $1,200 million. Which of the following is…
A: MPC = 0.80 EXCESS AD = $1200 MILLION…
Q: Question 15 Suppose the government decides to increase taxes by $30 billion to increase unemployment…
A: The correct answer is given in the second step.
Q: Which of the following statements about the economic fallout of the Covid-19 pandemic is false? O.…
A: The Covid 19 pandemic is one of the uncertainties that influenced the economies of almost all the…
Q: Which of the following could cause a decrease in the budget deficit? Check all that apply. O…
A: The question is answered below steps based on the application of all the given options
Q: Assume the economy is at an output level that is above the potential GDP, if a contrary fiscal…
A: Fiscal Policy refers to changes in the government expenditure or tax rates in order to bring the…
Q: Which of the following fiscal policy changes would be the most contractionary? O A. a $10 billion…
A: Fiscal and monetary policies are used by governments to achieve certain economic goals. The monetary…
Q: Contractionary fiscal policies do not necessarily decrease a country's debt-to-GDP ratio because O…
A: When talking about debt-to-GDP ratio, it is the economic measurement of total borrowings of the…
Q: The formula for the tax multiplier is Select one: O a. -MPC/(MPC + 1). O b. MPC/ (1 MPC). O c. 1/(1-…
A: Tax multiplier assumes that a change in tax would affect the consumption, keeping everything else…
Q: Suppose the economy is initially in long-run equilibrium. What are the long-run effects on potential…
A: The fiscal policy refers to the the policies of the expenditure and taxes. The fiscal policy is…
Q: Suppose the government enacts a stimulus program composed of $400 billion of new government spending…
A: It is given that the government increases government spending by $400 billion and it is also given…
Q: Quèstion 13 T2 A B GDP Refer to the diagram. Discretionary fiscal policy designed to expand GDP is…
A: Answer: To slow down the economy, government uses contractionary fiscal policy, by decreasing…
Q: Suppose legislation required the government to balance its budget annually. With regard to real GDP,…
A: When government wants to maintain balanced budget in the economy, total revenue of the government…
Q: Diagram 1 Price Level (PL) O ADO O AD1 YF O AD2 ADS O AD3 AD4 AD2 If you cannot see the image above,…
A: Aggregate Demand Aggregate demand refers to the entire amount of demand for all completed goods and…
Q: Which of the following is an automatic stabilizer that moves the federal budget toward deficit…
A: Any portion of the government budget that compensates changes in aggregate demand is referred to as…
Q: 1) Suppose that the government spending multiplier is 1.7, and that the tax multiplier is -1.2. An…
A: Total change multiplier =sum of the multiplier of spending and taxes =1.7+(-1.2)=0.5 There is an…
Q: The advantage of using contractionary fiscal policy to address a short-run inflationary gap, rather…
A: When the economy is in an inflationary gap, real GDP is larger than potential GDP and the price…
Q: Fiscal policy is the use of government tax and expenditure policy to influence the economy O True O…
A: Fiscal policy is used by government to influence aggregate demand and real GDP in the economy.
Q: What are the government’s fiscal policy options for ending severe demand-pull inflation? Which of…
A: Demand-pull inflation arises in the economy when the demand for goods and services increases and due…
Q: An example of an automatic stabilizer is: O A. government transfers rising when GDP rises. O B. tax…
A: "Economic stabilizers are any economic instruments that smoothen the business cycle." "Automatic…
Q: All things equal, an autonomous increase in the budget government purchases causes deficit function.…
A: Government spending is considered to be independent of the gross domestic product (GDP) level, which…
Q: Suppose the stock of government debt in Canada at the end of one fiscal year is $474 billion. If the…
A: Answer: Option D (the government had an overall budget surplus of $18 billion). Explanation: The…
Q: The formula for the tax multiplier is Select one: O a. -MPC/(MPC+ 1). O b. MPC/ (1 + MPC). O c.…
A: Tax multiplier refers to the amount of tax multiplied or increased out of the fiscal policy…
Q: In its 2021 Budget, the Canadian federal government estimated that for the fiscal year 2021-22, its…
A: Large federal budget deficits are dangerous to the fiscal health of the Canadian federal government.…
Q: AD AS AD1 P1 Real GDP tefer to the graph. Assume that the economy Is in a recession with a price…
A: When the government makes changes to rates of tax and levels of spending of government is the…
Q: Refer to the diagram. Discretionary fiscal policy designed to expand GDP is illustrated by O A. the…
A: Answer: Option:B is correct A movement from a to c along curve T2.
Q: Which of the following is not a predicted outcome of implementing automatic fiscal policy? O a.…
A: Automatic fiscal policy which is also known as an automatic stabilizer is a type of fiscal policy…
Q: A decrease in taxes is one way to pursue a contractionary fiscal policy because it will make…
A: Government conducts contractionary fiscal policy in order to eliminate inflationary gap from the…
Q: Which fiscal policy expects the economy to self-adjust? O balanced budget O counter-cyclical O…
A: Fiscal Policy is the policy in which taxes and government spending is used for influencing economic…
Q: Which of the following is carried out in an expansionary fiscal policy? O a. Higher taxes and lower…
A: Expansionary fiscal policy is targeted at increasing aggregate demand, and is carried out by two…
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: Golden Age of fiscal policy is has all of the following, except: O under 2 percent inflation rate O…
A: The policy that uses the collection of revenue by the government through taxes or cutting back taxes…
Q: Suppose the government implements fiscal consolidation by cutting spending while the nominal…
A: Fiscal consolidation refers to the situation when government tries to reduce its fiscal deficit by…
Q: 16) What is the first signal that policy makers may need to examine expansionary fiscal economic…
A: Expansionary fiscal policy : Due to increment in government expenditure , there will be increase in…
Q: When GDP and incomes are high the government collects more dollars in tax revenue. When they're low,…
A: GDP is the value of final goods and services produced in the economy within a given period of time.
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: An example of an expansionary fiscal policy is O a) eliminating certain deductions for taxes on…
A:
Q: Which of the following is a fiscal policy action aimed at reducing unemployment? Decreasing…
A: The government will use expansionary fiscal policy in form of increased government spending and…
Q: The government will have flexibility in implementing countercyclical fiscal policy when the…
A: Countercyclical fiscal policy refers to the one that works in the opposite direction to the business…
Q: Which of the following could NOT be expansionary fiscal policy tool? O A )increasing money supply O…
A: Expansionary fiscal policy tools are adopted by the government of the country.
Q: A decrease in taxes is one way to pursue a contractionary fiscal policy because it will make…
A: À decrease in taxes is one way to pursue a contractionary fiscal policy because it will make…
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: a) What are the three fiscal policy tools and how would each be used to counter a contractionary…
A: Fiscal policy refers to changes in government purchases and taxes, which are intended to achieve the…
Q: Contractionary fiscal policy occurs when the a) government decreases spending or decreases taxes to…
A: The use of the government spending and the tax policies to impact economic circumstances, notably…
Q: an a reduction in the budget deficit and fiscal stimulus occur simultaneously? Explain your answe
A: Yes, it can go both ways they can maintain fiscal stimulus with a reduction in the budget deficit.…
Q: Question 2 Given the following information: 1= 150, G = 150, T-150 and C= 150 +0.75(Yd) At least 2…
A: Consumption function as a tournament consumption and induced consumption. Autonomous consumption…
Q: Suppose that there are no crowding-out effects and the MPC is 0.8. By how much must the government…
A: Hi! thanks for the questions but as per the guidelines, we can answer only one question at one time.…
Q: An advantage of automatic stabilizers over discretionary fiscal policy is that O automatic…
A: Correct : automatic stabilizers are not subject to the same time lags as discretionary fiscal policy…
Q: According to Keynesian analysis, the adoption of an expansionary fiscal policy will result in: O an…
A: Fiscal policy is a policy that the government uses to influence the economy. It aims at certain…
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- Under what general macroeconomic circumstances might a government use expansionary fiscal policy? When might it use contractionary 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 advantage of automatic stabilizers over discretionary fiscal policy?
- What would happen if expansionary fiscal policy was implemented in a recession but, due to lag, did not actually take effect until after the economy was back to potential GDP?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?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.
- If the government were to try to offset surplus years with deficit years over the business cycle, this would result in O A. a reduction in investment capital. O B. a higher debt-to-GDP ratio. OC. an annually balanced budget. O D. a structurally balanced budget. O E. a cyclically balanced budget.a) Suppose that there are no crowding-out effects and the MPC is 0.8. By how much must the government increase expenditures shift the aggregate-demand curve right $10 billion? b. The model of Long-run Growth, proposes that fiscal policy can have lasting effects on savings, investment, and economic growth. On the other hand, the model of Aggregate Demand-Aggregate Supply suggests that the only long run effect of fiscal policy is an increase in the price level. How could you use the Aggregate Demand and Aggregate Supply model for a more accurate description of the short-run and long-run effects of an increase in government spending? Could you distinguish between different uses of government expenditures to predict their effects on prices and output?(a) Assume Consumption (C) is given by the equation C = 500 + 0.6(Y – T). Taxes (T) are equal to 600. Government spending is equal to 1,000. Investment is given by the equation I = 2,160 – 100r, where r = the real interest rate = 13 percent. In this case, what is the equilibrium Gross Domestic Product (GDP)/Total output (Y)/Total income? How does the equilibrium income change if government designs and executes expansionary fiscal policy? Show graphically and mathematically.
- A. Calculate the levels of consumption and savings that occurs when the economy is in equilibrium. B. Computer the government budget deficit in this economy. C. If government spending in banana land increases by $1000 what is the amount of the increase in equilibrium output? D. If taxes in banana land decrease by $1000 what is the new equilibrium output in this economy? E. To keep the government budget balanced, of both government spending and taxes in banana land increase by $1000 what is the change in equilibrium income level?Asap both 1.a) Which of the following statements is correct?l.Expansionary fiscal policy is used to remove a recessionary gap.ll. Expansionary fiscal policy is used to shift AD right.A) l onlyB) I onlyC)both I and ID) neither I nor ll 1.b) Which of the following are examples of contractionary fiscal policy?A) decreasing government expendituresB) increasing taxesC) increasing transfer paymentsD) A and B are both contractionary fiscal policiesE) A, B, and C are all contractionary fiscal policiesa) What are the three fiscal policy tools and how would each be used to counter a contractionary gap? b) True or False and explain: Fiscal Policy is effective at reducing the duration of an economic contraction. c) If the spending multiplier is 2.5 and the economy is in a $500 billion contractionary gap, how much should I increase government purchases to eliminate the gap? d) Continuing with c, if the MPC is 0.8, how much would I need to increase transfer payments to eliminate the $500 billion contractionary gap? e) True or False and explain: Households always react to tax changes in a predictable manner. Module 6: Deficits and the Debt. a) Distinguish between deficit and debt. b) Explain what crowding out is and why it reduces the impact of fiscal stimulus. c) True or false and explain: The national debt represents a threat of bankruptcy. (For d and e) Suppose the interest on the debt was $600 billion. If interest is paid domestically, 90% will be spent domestically (the remainder is…
