EBK MACROECONOMICS
10th Edition
ISBN: 9780134896571
Author: CROUSHORE
Publisher: VST
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Chapter 11, Problem 4AP
To determine
To Evaluate: Effects on different economic variable under different condition using IS-LM model.
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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.
Discuss three reasons why the use of fiscal policy to stabilize the economy is more complicated than suggested by the basic Keynesian model.
Identify one fiscal policy action that could counter the increase in investments. Explain how this policy will affect each of the following.i. Output ii. The price level iii. Nominal interest rates
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- If a recession persists due to nominal wage and price stickiness (i.e., slow adjustment of nominal wages downward), what kind of fiscal policy can bring us out of this recession? decreased government expenditures and increased taxes increased government expenditures and decreased taxes decreased government expenditures contractionary fiscal policyarrow_forwardWhen thinking about Keynesian fiscal policy it is the case that big changes in national income can be made by making small changes to: (a) Exchange rates; (b) Interest rates. (c) Tax codes; (d) Autonomous expenditure;arrow_forwardWhat is the impact of using Fiscal policy tools on an economy - more specifically aggregate demand and how can they be used to potentially assist (stimulate) an economy experiencing sluggish growth or in a recession. In your discussion, investigate the positive impacts, potential impact of lags, as well as other disadvantages associated with fiscal tools.arrow_forward
- Inflation rates in the US have recently been at their highest level in decades. Imagine your local Congressman came to you for advice. If lower inflation is her only goal, what is a specific Fiscal Policy that you would recommend? Note: you must be specific - name the fiscal policy tool that you would use and how you would change it (increase or decrease or raise or lower or buy or sell - whatever is relevant to the tool you're talking about). It's not enough to say "expansionary fiscal policy" or "contractionary fiscal policy." Feel free to review the sections of the text on expansionary and contractionary.fiscal policy to review the specific types of policies that fiscal policy includes.arrow_forwardAccording to the classical macroeconomic model, expansionary fiscal policy has an inflationary effect True or falsearrow_forwardIf the government tries to reduce inflation when the production level in the country is higher than potential Gross Domestic Product, then one of the following answers which depicts a fiscal policy measure will be able to achieve that goal. Which one? Group of answer choices decrease in government spending decrease corporate tax rates decrease the interest rate increase transfer paymentsarrow_forward
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