Homework Answers
The expansionary fiscal policy creates budget deficit because under expansionary fiscal policy there is an increase in the level of government spending. We should focus more on the fiscal policy because the increase in government spending increase the marginal efficiency of capital thus increasing the investment.It also leads to increase in the aggregate demand thus increasing the output level.
If the government focuses on reducing the budget deficit then it will either reduce the spending or increase the revenue. Higher tax will reduce the consumption while reduced govt. spending reduces the MEC thus lower investment level in the economy.
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5. Which type of fiscal policy creates budget deficit and why? Should we put more emphasis...
Question 13 (3 points) Which fiscal policy is likely to reduce the government's budget deficit? Contractionary...
Question 13 (3 points) Which fiscal policy is likely to reduce the government's budget deficit? Contractionary fiscal policy Fiscal stimulus Expansionary fiscal policy O Automatic fiscal policy Page 13 of 30 Previous Page Next Page
** LUIE detination Fiscal policy Budget deficit Budget surplus National Debt Marginal Tax Rate Progressive tax...
** LUIE detination Fiscal policy Budget deficit Budget surplus National Debt Marginal Tax Rate Progressive tax Regressive tax Deficit Dove Deficit Hawk Automatic Stabilizers Laffer curve 1. Use the loanable funds model to explain why classicals argue that government deficits crowd out private spending. Explain why Keynesians argue that government deficits crowd in private spending. 2. Explain the logic behind "trickle down economics" (i.e the supply-side argument in favor of cutting taxes on the wealthy). Explain why Keynesians don't believe...
why does the budget surplus get smaller or th deficit get larger even without discretionary fiscal...
why does the budget surplus get smaller or th deficit get larger even without discretionary fiscal policy when unemployment increase
1, Monetary versus Fiscal Policy, which one you favored more in implementation for macroeconomics policy? Why?...
1, Monetary versus Fiscal Policy, which one you favored more in implementation for macroeconomics policy? Why? 2, Discuss and defend your thought about the theories of New Classical versus New Keynesian response relating to macroeconomics. 3, Discuss and compare the four main market structures with illustration.
Year Budget Surplus Budget Deficit Debt 205 1 2 14 3 323 4 8 310 5...
Year Budget Surplus Budget Deficit Debt 205 1 2 14 3 323 4 8 310 5 6 6 The table above gives data about Finlandia's budget balance and debt in millions of euros for 6 years. Given this information we know that Finlandia had a budget (type surplus or deficit) A in year 5 which was equal to $ A million euros
1.) Which of the following is an example of a timing problem with enacting fiscal policy?...
1.) Which of the following is an example of a timing problem with enacting fiscal policy? Since most people increasing their savings when their income rises, the tax multiplier is likely to be smaller than originally thought. Once the government increases spending, it is difficult to decrease spending in the future Democrats want to pass a spending bill, but Republicans do not. They argue for months in the House of Representatives prior to a modified bill being passed. the Federal...
1. When the government increases spending by issuing more bonds, it causes: a) nations currency to...
1. When the government increases spending by issuing more bonds, it causes: a) nations currency to appreciate b)exports increase c)interest rates decrease d)demand for loanable funds decrease e)decreases merchandise trade deficit 2. When the Fed decreases money supply to combat inflation, it cuases: a)the price of the U.S. dollar to decrease b) capital to flow out of the US c)an increase in the merchandise trade deficit d)an increase in private spending e) a decrease in the interest rates 3. Which...
Among the most important problems of implementing fiscal policy include all except which of the following?...
Among the most important problems of implementing fiscal policy include all except which of the following? Correctly timing the desired fiscal stimulus, given the inevitable lags and forecasting errors Determining how large a stimulus to apply Assessing when policy actions should be reversed Determining how long a time lag to apply If the central bank does not use accommodating monetary policy, a fiscal stimulus is likely to increase interest rates, which in turn, will cause planned investment to decrease. What...
Week 5 worksheet L. Explain why aa do. reay is the gsivernment budget deficit could lead...
Week 5 worksheet L. Explain why aa do. reay is the gsivernment budget deficit could lead to an increase in invest ment by firns. 2. Suppose that beca tse of a rising price level, consumer starts carrying more of their wealth as cash, in order to curty ouk trvsactions, and thus are less willing to put their wealth into other assets-s?ch as stuck, or bonds. Depict the effect this will have on the market for loanable funds, and expiais wbat...
Suppose you are put in charge of fiscal policy for the economy in which tax collections...
Suppose you are put in charge of fiscal policy for the economy in which tax collections are always $400 and in which the four components of aggregate demand are as follows: (X-IM) (Dollars) (Dollars) GDP (Rollars) 1,360 1,480 Taxes (Dollars) 400 400 200 DI (Dollars) 960 1,080 1,200 1,320 1,440 30 (Dollars) 720 810 900 (Dollars) 500 500 200 Total Real Expenditure (TE) (Dollars) 1,450 1,540 1,630 1,720 1,810 1,600 400 200 500 30 1,720 400 400 1,840 1,080 200...
Question 13 (3 points) Which fiscal policy is likely to reduce the government's budget deficit? Contractionary fiscal policy Fiscal stimulus Expansionary fiscal policy O Automatic fiscal policy Page 13 of 30 Previous Page Next Page
** LUIE detination Fiscal policy Budget deficit Budget surplus National Debt Marginal Tax Rate Progressive tax Regressive tax Deficit Dove Deficit Hawk Automatic Stabilizers Laffer curve 1. Use the loanable funds model to explain why classicals argue that government deficits crowd out private spending. Explain why Keynesians argue that government deficits crowd in private spending. 2. Explain the logic behind "trickle down economics" (i.e the supply-side argument in favor of cutting taxes on the wealthy). Explain why Keynesians don't believe...
Year Budget Surplus Budget Deficit Debt 205 1 2 14 3 323 4 8 310 5 6 6 The table above gives data about Finlandia's budget balance and debt in millions of euros for 6 years. Given this information we know that Finlandia had a budget (type surplus or deficit) A in year 5 which was equal to $ A million euros
Week 5 worksheet L. Explain why aa do. reay is the gsivernment budget deficit could lead to an increase in invest ment by firns. 2. Suppose that beca tse of a rising price level, consumer starts carrying more of their wealth as cash, in order to curty ouk trvsactions, and thus are less willing to put their wealth into other assets-s?ch as stuck, or bonds. Depict the effect this will have on the market for loanable funds, and expiais wbat...
Suppose you are put in charge of fiscal policy for the economy in which tax collections are always $400 and in which the four components of aggregate demand are as follows: (X-IM) (Dollars) (Dollars) GDP (Rollars) 1,360 1,480 Taxes (Dollars) 400 400 200 DI (Dollars) 960 1,080 1,200 1,320 1,440 30 (Dollars) 720 810 900 (Dollars) 500 500 200 Total Real Expenditure (TE) (Dollars) 1,450 1,540 1,630 1,720 1,810 1,600 400 200 500 30 1,720 400 400 1,840 1,080 200...
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