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xplain the five problems and criticisms that arise in the implementation of fiscal policy.

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 16SCQ: What would happen if contractionary fiscal policy were implemented during an economic boom but, due...

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Explain the five problems and criticisms that arise in the implementation of fiscal policy.

Those who answer this questions on and after Nov. 9th should answer the following question:

What two factors could reduce the net economic burden that might be shifted to future generations from the public debt?

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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 contractionary fiscal policy in a time of strong economic growth?
What would happen if contractionary fiscal policy were implemented during an economic boom but, due to Lag, it did not take effect until the economy slipped into recession?
Is expansionary fiscal policy more attractive to politicians who believe in larger government or to politicians who believe in smaller government? Explain your answer.
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.
If a government runs a budget deficit of 10 billion dollars each year for ten years, then a surplus of 1 billion for five years, and then a balanced budget for another ten years, what is the government debt?