Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 11, Problem 5CQ
To determine
Changes in fiscal policy and the problems related with timing.
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Analyze fiscal policy in order the generate macroeconomic stability.
The various kinds of automatic stabilizers are:
Group of answer choices
Expansionary Monetary Policy
All of them
Taxes and Transfer payments
Increased Defense spending
Was fiscal policy effective when the US economy was experiencing stagflation during the 1970s? Why or why not?
Chapter 11 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- Which of the following is an appropriate fiscal policy response if the economy is in a state of rising inflation? Contractionary fiscal policy by decreasing government spending and taxes. Expansionary fiscal policy by increasing government spending and taxes. Contractionary fiscal policy by decreasing government spending and increasing taxes. Expansionary fiscal policy by increasing government spending and lowering taxes.arrow_forwardWhich statement below is true of ONLY fiscal policy? Uses government expenditures to create demand Increases the availability of money Used to alter AD A policy typically set by a banking authority. Choose correctly option explanation. But not copy paste from anywhere.arrow_forwardWhich of the following would be a fiscal policy prescription for ending inflation? A) Raise taxes B) Increase government expenditures to let the multiplier work C) Raise interest rates to stimulate saving D) Promote exports to increase injections in the domestic economyarrow_forward
- Why do economists often disagree about the conduct of macroeconomic stabilization policy?arrow_forwardIn the context of macroeconomic stabilization policies, which scenario best illustrates the concept of "automatic stabilizers"? a) A government increases spending on infrastructure projects during a recession as part of a deliberate fiscal stimulus package. b) During an economic downturn, unemployment benefits automatically increase as more people become unemployed, providing a buffer to the economy. c) The central bank adjusts the interest rates in response to changes in inflation and unemployment data. d) A government adopts a new policy to increase taxes on high-income earners during periods of economic boom.arrow_forwardBased on the Adaptive Expectations Theory, advice the Cabinet Secretary for Treasury and Planning, on the possibilities of financing the fiscal gap using debt to increase aggregate demand and spur economic growth that would create job opportunities for the country.arrow_forward
- In each of the following cases, determine whether the policy is an expansionary or contractionary fiscal policy a) The number of weeks an unemployed person is eligible for unemployment benefit is increasedb) The tax on gasoline has increased. Don,t copy from anywhere. Answer must br correct. Do all answer step by step.arrow_forwardExplain the interaction of monetary policy and fiscal policy at full employmentarrow_forwardIdentify the various policy choices available when an economy experiences an inflationary or recessionary gap and discuss some of the pros and cons that make these choices controversial.arrow_forward
- If stability of the economy is the primary objective of Fiscal Policy, then an Annually Balanced Budget (Government Expenditures = Tax Revenues) is the best policy approach. True or False?arrow_forwardFiscal policy can take much longer to act than monetary policy given there are lags that can occur in the process. The time that it takes to determine whether or not a recession has occurred is referred to as the a. recognition lag. b. legislative lag. c. implementation lag. d. structural lag.arrow_forward
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