Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Chapter 15, Problem 2AP
To determine
Reason for adverse effect of the program for low wage recipient.
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Which of the following is a TRUE statement about arguments for and against requiring a balanced federal budget in the U.S.?
Group of answer choices
One argument against a required balanced federal budget is that sometimes it is necessary or beneficial to run large budget deficits in the short-run.
One argument against a required balanced federal budget is that the government does not have macroeconomic responsibilities
One argument in support of a required balanced federal budget maintains that having a balanced budget each year would make the impacts of economic recessions less severe.
One argument against a required balanced federal budget is that this mandate cannot be added to the Constitution, and therefore, could not be enforced.
Determine whether the cases below are examples of either expansionary fiscal policy, contractionary fiscal policy, expansionary monetary policy, or contractionary monetary policy and explain why.
Explain the concept of automatic stabilizers in fiscal policy and how they function during economic downturns.A) Automatic stabilizers are government policies that always lead to economic stability.B) Automatic stabilizers are government programs like unemployment benefits and progressive taxation that automatically kick in during economic downturns to provide support and stabilize the economy.C) Automatic stabilizers are monetary policies implemented by the central bank to control inflation.D) Automatic stabilizers have no relevance in fiscal policy.
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- Explain the concept of automatic stabilizers in fiscal policy and how they function during economic downturns. A) Automatic stabilizers refer to government policies that always lead to economic stability. B) Automatic stabilizers are government programs like unemployment benefits and progressive taxation that automatically kick in during economic downturns to provide support and stabilize the economy. C) Automatic stabilizers are monetary policies implemented by the central bank to control inflation. D) Automatic stabilizers have no relevance in fiscal policy.arrow_forwardWhich of the following is a TRUE statement about arguments for and against requiring a balanced federal budget in the U.S.? One argument against a required balanced federal budget is that this mandate cannot be added to the Constitution, and therefore, could not be enforced. One argument against a required balanced federal budget is that the government does not have macroeconomic responsibilities One argument against a required balanced federal budget is that sometimes it is necessary or beneficial to run large budget deficits in the short-run. One argument in support of a required balanced federal budget maintains that having a balanced budget each year would make the impacts of economic recessions less severe.arrow_forwardAssume that in a hypothetical country, coal mining is a significant industry, hiring a high proportion of that country’s workforce. Describe, in a short essay inserted below this question, how a significant decline in coal mining, as the country attempts to switch to environmentally safer production, can ripple through the entire economy, and how the government can use fiscal policy tools to combat such negative effectsarrow_forward
- 21. Which of the following defines a fiscal policy? a.Commercial bank policies to stabilize domestic output, employment, and the price level b.World Bank policies to stabilize domestic output, employment, and the price level c.Central Bank policies to stabilize domestic output, employment, and the price level d.Government spending and taxes to stabilize domestic output, employment, and the price levelarrow_forwardIn addition to issuing bonds, explain any two major ways the government can raise revenue to finance her spendingarrow_forwardProjected future expenditures on entitlement programs such as Social Security and Medicare are expected to lead to increasingly large federal budget deficits in future decades. Factors behind this trend include: - An unusual sense of entitlement among baby boomers - Increasingly generous benefits - A growing proportion of retirees to workers - Increasing life expectancyarrow_forward
- True/False Unemployment benefits are an example of fiscal policy.arrow_forwardWhat are the main tax credit programs designed to boost the incomes of people who are unemployed or low earners? How effective are these tax credit programs, and for whom? Give two references and citations.arrow_forwardExplain how cuts in funding for programs such as Head Start might affect the development of human capital in the United States.arrow_forward
- Amid an economic recession, a government decides to implement an expansionary fiscal policy. This policy includes increasing government spending on infrastructure projects and reducing taxes to stimulate demand and create jobs. While the policy aims to boost economic activity, it also risks increasing the national debt and potentially leading to higher inflation. In this scenario, the primary objective of the expansionary fiscal policy is to: A) Reduce government spending and increase taxes B) Stimulate economic activity and job creation C) Focus solely on long-term economic growth D) Increase the national debt and inflation Explain all options plsarrow_forwardHow does the government budget process impact fiscal policy decisions, and what are the potential consequences of budget deficits and surpluses? A) The government budget process has no bearing on fiscal policy decisions. B) The government budget process involves decisions about government spending and taxation; budget deficits occur when spending exceeds revenue, while surpluses occur when revenue exceeds spending. Deficits may lead to increased borrowing and interest payments, while surpluses can reduce government debt. C) The government budget process exclusively focuses on taxation and has no relation to spending. D) Budget deficits always lead to economic stability.arrow_forwardAmid an economic recession, a government decides to implement an expansionary fiscal policy. This policy includes increasing government spending on infrastructure projects and reducing taxes to stimulate demand and create jobs. While the policy aims to boost economic activity, it also risks increasing the national debt and potentially leading to higher inflation. In this scenario, the primary objective of the expansionary fiscal policy is to: ) Reduce government spending and increase taxes A B) Stimulate economic activity and job creation C) Focus solely on long-term economic growth D) Increase the national debt and inflationarrow_forward
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