Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 14E
To determine
Determine the given statement is associated with which school of thought :-
"Government policymakers should use fiscal policy to adjust aggregate demand in response to
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Using the aggregate demand and supply model show how a government can manage aggregate demand.
Fiscal policy refers to the idea that aggregate demand is affected by changes in
a.
the money supply.
b.
government spending and taxes.
c.
trade policy.
d.
All of the above are correct.
Supply-side fiscal policy targets which of the following?
A) Long-run Aggregate Supply
B) Short-run Aggregate Demand
C) Short-run Aggregate Supply
D) Long-run Aggregate Demand
Knowledge Booster
Similar questions
- Analyze fiscal policy in order the generate macroeconomic stability. Which kind of economic measures do you recommend at the current economic situation which is characterized as a stagflation situation? (use graphs)arrow_forwardUsing the aggregate demand and supply model show how a government can manage aggregate demand. Faced with the possibility of recession explain how fiscal may be used to rectify the position.arrow_forwardBy decreasing government spending and aggregate demand, the policy ________ the price level and ________ equilibrium real GDP, ceteris paribus. Select one: a. decreases; increases b. increases; decreases c. increases; increases d. decreases; decreasesarrow_forward
- What were the monetary and fiscal policy responses to the Great Recession? Discuss their effectiveness and how the policy contributed to GDP growth.arrow_forwardWhich fiscal policy is meant to decrease aggregate demand? a. Divisionary b. Built in c. Expansionary d. Contractionaryarrow_forwardA stimulative monetary or fiscal action should increase aggregate demand. What factors may limit the actual increase in aggregate demand?arrow_forward
- From the perspective of someone using aggregate-demand and aggregate supplyanalysis, what is the impact of a tax cut when the economy is operating above fullemployment. Is this a wise policy? Why or why not?arrow_forwardAnalyze fiscal policy in order the generate macroeconomic stability.arrow_forwardFiscal policy consists of intentional changes in the government's spending levels or tax policies designed to achieve specific macroeconomic goals such as full employment, price stability, or economic growth. By influencing the amount of total spending in the economy, the government can influence the position of the aggregate demand curve. Our theory tells us that aggregate demand will shift by a multiple of the change in spending or taxes. However, spending and tax changes have slightly different effects, as changes in taxes affect spending only indirectly by changing the amount of disposable income. An expansionary fiscal policy may be implemented to fight a recession, while a contractionary policy may be appropriate to control demand-pull inflation. Exploration: How do changes in government spending and taxes affect the equilibrium price level and real GDP? Discuss in detail use your economics textbook.arrow_forward
- Which of the following statements about Fiscal Policy is INCORRECT?(a) In order to combat inflation, the South African Reserve Bank must apply acontractionary fiscal policy;(b) A contractionary fiscal policy can result in higher levels of unemployment; (c) Expansionary fiscal policy will increase the budget deficit; (d) The application of fiscal policy will have no effect on aggregate supply in the AD‐AS model.arrow_forwardHow does increased government spending affect the aggregate demand curve?arrow_forwardSuppose that consumers become pessimistic about the future health of the economy. What will happen to aggregate demand and to output? Show this using AD/AS graphs. What might the president and Congress have to do to keep output stable?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning