ECONOMICS-W/MYECONLAB
7th Edition
ISBN: 9780134833125
Author: Hubbard
Publisher: PEARSON
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Question
Chapter 29, Problem 29.5.3RQ
To determine
The impact of fiscal policy on aggregate demand.
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Students have asked these similar questions
Which of the following is a true statement describing expansionary fiscal policy’s impact in open and closed economies?
Select one:
a. Expansionary fiscal policy crowds out only investment spending and purchases of consumer durables in an open economy.
b. Expansionary fiscal policy crowds out investment spending, purchases of consumer durables and net exports in an open economy.
c. Expansionary fiscal policy crowds out investment spending, purchases of consumer durables and net exports in a closed economy.
d. Expansionary fiscal policy does not crowd out investment spending and purchases of consumer durables in an open economy.
What does it mean by "aggregate demand and aggregate supply" when pertaining to macroeconomic policy in an open economy?
What is the effect of a fiscal expansion on output and interest rates when exchange rates are fixed and capital is perfectly mobile?
Chapter 29 Solutions
ECONOMICS-W/MYECONLAB
Ch. 29 - Prob. 29.1.1RQCh. 29 - Prob. 29.1.2RQCh. 29 - Prob. 29.1.3RQCh. 29 - Prob. 29.1.4PACh. 29 - Prob. 29.1.5PACh. 29 - Prob. 29.1.6PACh. 29 - Prob. 29.1.7PACh. 29 - Prob. 29.1.8PACh. 29 - Prob. 29.1.9PACh. 29 - Prob. 29.1.10PA
Ch. 29 - Prob. 29.1.11PACh. 29 - Prob. 29.2.1RQCh. 29 - Prob. 29.2.2RQCh. 29 - Prob. 29.2.3RQCh. 29 - Prob. 29.2.4RQCh. 29 - Prob. 29.2.5PACh. 29 - Prob. 29.2.6PACh. 29 - Prob. 29.2.7PACh. 29 - Prob. 29.2.8PACh. 29 - Prob. 29.2.9PACh. 29 - Prob. 29.2.11PACh. 29 - Prob. 29.2.12PACh. 29 - Prob. 29.2.13PACh. 29 - Prob. 29.2.14PACh. 29 - Prob. 29.3.1RQCh. 29 - Prob. 29.3.2RQCh. 29 - Prob. 29.3.3RQCh. 29 - Prob. 29.3.4PACh. 29 - Prob. 29.3.5PACh. 29 - Prob. 29.3.6PACh. 29 - Prob. 29.3.7PACh. 29 - Prob. 29.3.9PACh. 29 - Prob. 29.3.10PACh. 29 - Prob. 29.4.2RQCh. 29 - Prob. 29.4.5PACh. 29 - Prob. 29.4.6PACh. 29 - Prob. 29.4.7PACh. 29 - Prob. 29.4.8PACh. 29 - Prob. 29.5.1RQCh. 29 - Prob. 29.5.2RQCh. 29 - Prob. 29.5.3RQCh. 29 - Prob. 29.5.4PACh. 29 - Prob. 29.5.5PACh. 29 - Prob. 29.5.6PACh. 29 - Prob. 29.5.7PACh. 29 - Prob. 29.1RDECh. 29 - Prob. 29.2RDECh. 29 - Prob. 29.3RDECh. 29 - Prob. 29.4RDECh. 29 - Prob. 29.5RDECh. 29 - Prob. 29.1CTE
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- What is fiscal deficit and what are two reasons why this economic statistic is so closely monitored in small fixed exchange rate economies?arrow_forwardwhen it comes to the application of how the federal budget deficit affects economic variables, what is the impact of a federal budget deficit on interest rates and the trade balance?arrow_forwardWhat do the terms internal balance and external balance mean in open-economy macroeconomics?arrow_forward
- In a closed economy, suppose fiscal policy adds $500 bln in new government spending to GDP. Will the net effect on GDP be equal to, less than, or greater than $500? On what does your answer depend? In an open economy, is that same $500 bln rise in government spending going to have the same effect, all else equal, as in a closed economy? Why or why not?arrow_forwardgraphically compare effects of monetary or fiscal expansion on equilibrium output in closed and open economy. EXPLAIN your resultsarrow_forwardWhat is the relationship between India's fiscal policies and its current account?arrow_forward
- Will a direct increase in the price of U.S. goods relative to foreign goods lead to a change in the quantity demanded of Real GDP or to a change in Aggregate Demand? Will a change in the exchange rate that subsequently increases the price of U.S. goods relative to foreign goods lead to a change in the quantity demanded of Real GDP or to a change in Aggregate Demand?arrow_forwardIf the government reduces government purchases, then what happens to the real interest rate in a closed economy, small open economy, and a large open economy?arrow_forwardWhy are budget deficits and trade deficits sometimescalled the twin deficits?arrow_forward
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