According to traditional Keynesian analysis, a tax cut has a larger effect on aggregate demand than an increase in government expenditures of the same size. a.true b.false

Q: When the economy is going through recessionary gap, which of the below policy is more likely to be…

A: Aggregate Demand curve (AD) is the downward sloping curve which shows an inverse relationship…

Q: If the consumer function has the form C = 100 + 0.8 (Y-T), where T is the level of lump-sum taxes,…

A: IS curve shows the combination of interest rate and the output level at which the goods market is in…

Q: Explain any two criticism of Keynesian theory

A: According to the given question a Keynesian theory is basically a theory which refers to the total…

Q: If the economy above was at point D, a good thing to do would be to increase government spending.…

A: Increasing government spending or reducing government spending to energize a sluggish economy,…

Q: When thinking about Keynesian fiscal policy it is the case that big changes in national income can…

A: Fiscal policy refers to the macroeconomic policy practiced by the government of the country with the…

Q: Which of the following statements about Fiscal Policy is INCORRECT? choose the correct answer (a) In…

A: Fiscal policy is independently implemented or used by the government to make changes in the market…

Q: Suppose the economy suffers a high rate of inflation According to Keynesian economists, the…

A: We are going to explain the relationship between inflation rate and fiscal contractionary policy to…

Q: Which of the following would be a fiscal policy prescription for ending inflation? A) Raise taxes…

A: Inflation is the incident when the general price-level(P) of the economy rises over time. The…

Q: 29 When the economy is in Keynesian macroeconomic equilibrium, planned investment is greater than…

A: Planned Investment is the amount of investment that the firms in an economy plan to undertake during…

Q: Although our development of the Keynesian cross in this chapter assumes that taxes are a fixed…

A: 1. As there is negative relationship between the tax rate and consumption. Higher the tax rate lower…

Q: Some of the practical problems relating to implementing expansionary Keynesian policy relate to…

A: Lag is just another way of saying "delay"; fiscal policy is associated with data lags, recognition…

Q: .If a government tax cut has its intended effect of increasing consumer spending, then you know that…

A: Meaning of Fiscal Policy: The term fiscal policy refers to the situation under which the…

Q: Consider two standard Keynesian models. In Model 1, there are two types of consumers, Type A, who…

A: Keynesian model: It refers to the economic theory which is related to the total spending of the…

Q: A set of rules and regulations leading to a tax policy that is T=To+t*GDP is a) countercyclical b)…

A: Countercyclical policy: It is the policy used in order to reduces the change in business cycle , it…

Q: How can the Keynesiam model of deficit budget spending affect the government management?

A: Answer: Keynes's model of deficit budget spending is indeed a contribution to the world. when an…

Q: Fiscal policy can be classified into which two groups? A. Keynesian and classical B. discretionary &…

A: Fiscal policy refers to the government action to influence the market by making changes in taxation…

Q: DESCRIBE The relationship between the Multiplier, Keynesian Full Employment Level of National Income…

A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…

Q: The use of government purchases (G) as a fiscal policy tool can have an effect on long-run growth in…

A: Government purchase is also known as the government spending on goods and services. The federal’s,…

Q: Keynes advocated government deficit spending during recessions, especially if full employment was…

A: True. The above statement is correct.

Q: Why did Orthodox Keynesians believe that fiscal policy is more powerful than monetary policy?…

A: Meaning of Fiscal Policy: The term fiscal policy refers to the situation under which the…

Q: According to the Keynesian economists, who reject the self-regulating economy, how does the economy…

A: Before the Keynesian economics came into existence, there was a classical believe that economy is…

Q: According to Keynesian analysis; the proper government response to a recession is _________,whereas…

A: A recession refers to when the economy is producing less that its potential output.  Expansionary…

Q: According to Keynesians, when should the federal government run a deficit and when should it run a…

A: The Keynesians recommend the active intervention of government in economic activities to deal with…

Q: Assuming a constant money supply, government expenditures can be financed by which of the following?…

A: The money supply helps the economy to grow by increasing the purchasing power on one hand while it…

Q: When using the Aggregate Expenditures model (or Simple Keynesian Model) Increasing taxes and…

A: The aggregate expenditure model links spending components (consumption, investment, government…

Q: Suppose in the country of Miltonia, Ricardian equivalence is 100% true. A- If Miltonian tax rates…

A: One of the most commonly used theories of Professor David Ricardo is the concept of comparative…

Q: Consider a closed economy where investment is constant and the marginal propensity to consume is…

A: The marginal propensity to consume assesses a consumer's willingness to spend or save in response to…

Q: From the perspective of someone using aggregate-demand and aggregate supply analysis, what is the…

A: Full employment is the situation where all the resources are fully utilized.

Q: In the new Keynesian view, the larger the proportion of firms in the economy with sticky prices the…

A: Sticky prices or wages means that Price doesn’t change with change in output. It happens when…

Q: With the Keynesian content, when the marginal propensity to consume is 2/3, a cut in taxes of $120…

A: The economics as a study is based upon the idea that the resources which are present with the…

Q: What effect do you think this federal government shutdown may have had on the Keynesian C + I + G +…

A: Government shutdown is defined as the termination of unnecessary government administration and…

Q: How would a Keynesian Economist use Fiscal Policy to fight a Recession? Please do not write about…

A: "Recession means reduction or fall in the economic activity and this fall is visible in real GDP,…

Q: Which of the following statements about Fiscal Policy is INCORRECT? (a) In order to combat…

A: Fiscal policy refers to the changes in federal government purchases and taxes. Expansionary fiscal…

Q: Contrast the appropriate Keynesian response to an economy experiencing recession with the…

A: Meaning of Inflation: Inflation generally arises when there is an excessive increase in the level…

Q: 18- tax cuts directed at higher income individuals will do more to stimulate the economy than those…

A: Tax refers to the compulsory charges levied by the government on its citizen and the citizen. The…

Q: Consider two standard Keynesian models. In Model 1, there are two types of consumers, Type A, who…

A: According to Keynesian economics, the government's fiscal and financial policy may impact the…

Q: Which do you believe is the better macroeconomic policy to use for stabilizing (achieving potential…

A: A MP is a policy implemented by the Central Bank(CB) or the government of the company to control the…

Q: Total spending in the Keynesian model of a closed economy without government includes Select one: a.…

A: Total spending in the Keynesian model of a closed economy without government includes: b.…

Q: What is one of the net effects of expansionary fiscal policy according to the Neoclassical view?…

A: The answer is - d. Increase of money supply

Q: can you tell me if these answers are correct? they are true/false. 14) Crowding out, when it…

A: Fiscal policy is the use of government spending or tax to influence the macroeconomic condition. It…

Q: Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian…

A: T stands for Government revenue from tax. G stands for Government expenditure.

Q: 5- In the Keynesian range of the AS curve, increases in taxes will raise unemployment- true 16- If…

A: Keynesian economist focuses on aggregate demand and aggregate supply, which according to him is the…