Homework Answers
1.Lesser the MPC,lesser the value of multiplier and lesser the effect of fiscal policy.
Answer-Less effective.
2.Shorter implementation lags are associated with more effective fiscal policy.
Answer-More effective.
3.Less effective as consumption falls and saving rises.
4.More effective
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Response Questions Part A To D Determine whether each of the following would make fiscal policy...
2. Determine whether consumers suddenly becoming more concerned about permanent income than about current income would...
2. Determine whether consumers suddenly becoming more concerned about permanent income than about current income would make fiscal policy more effective or less effective
Response Questions Part A To D Determine whether each of the following, other factors held constant,...
Response Questions Part A To D Determine whether each of the following, other factors held constant, would lead to an increase, a decrease, or no change in the level of real GDP demanded: a. A decrease in government purchases b. An increase in taxes c. A reduction in transfer payments d. A decrease in the marginal propensity to consume
7. Those who advocate counter-cyclical fiscal policy would agree with all but one of the following...
7. Those who advocate counter-cyclical fiscal policy would agree with all but one of the following statements. Which is the exception? A) Governments should be non-interventionist. B) Automatic stabilizers are not particularly effective. C) The economy is not capable of automatic self-adjustment in response the problems of unemployment and inflation. D) Counter cyclical fiscal policy is a powerful and effective tool. E) Government budget deficits are a less serious problem than income gaps. 8. Assume that the economy is in...
Consider an economy with an inflationary gap. The advantage of using a contractionary fiscal policy rather...
Consider an economy with an inflationary gap. The advantage of using a contractionary fiscal policy rather than allowing the economy's natural adjustment mechanism to operate is that O A private sector expenditures increase on their own, the policy will stabilize real GDP. OB. It will shorten what might otherwise be a long recession OC. will reduce the inflationary pressure on prices that would otherwise ocur. OD. It wil dose the output gap. Click to select your answer MacBook Air Assume...
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...
1. Analyze the difference between macroeconomics and microeconomics (written response). Determine whether each of the following...
1. Analyze the difference between macroeconomics and microeconomics (written response). Determine whether each of the following is primarily a macroeconomic issue or a microeconomic issue (answer only). A) What price to charge for a TV B) Tax reform on total consumer spending in the economy C) Your family's decisions about what to purchase D) A contractor's decision regarding how much to work each week E) Government policy to increase employment 2. What is the difference between a positive economic statement...
1. Expain the effect of a discretionary cut in taxes of $40 billion on the economy when the economy’s marginal propensity to consume is .75. How does this discretionary fiscal policy differ from a...
1. Expain the effect of a discretionary cut in taxes of $40 billion on the economy when the economy’s marginal propensity to consume is .75. How does this discretionary fiscal policy differ from a discretionary increase in government spending of $40 billion? 2.Explain what is meant by a built-in stabilizer and give two examples. 3.Differentiate between discretionary fiscal policy and nondiscretionary or built-in stabilization policy. 4.What does the “standardized budget” measure and of what significance is this concept? 5.What are...
9.What is Say’s Law and what do classical economists say about prices, wages, and interest rates?...
9.What is Say’s Law and what do classical economists say about prices, wages, and interest rates? What are the three states of the economy in relating the real GDP to natural real GDP? In a recessionary gap, is there a surplus or a shortage of production? What does that imply about the labor market and how wages may change? Understand the differences between a recessionary gap, inflationary gap, and long run equilibrium. How is the physical production possibilities frontier (PPF)...
Fiscal Policy O is always effective Can include raising interest rates and buying bonds Includes changes...
Fiscal Policy O is always effective Can include raising interest rates and buying bonds Includes changes in taxes or government spending O is conducted by the FED D Question 17 The number of federal banks is O 100 O 12 O 454 07 Question 18 What is the Discount Rate O The rate that the Fed charges banks The rate set for student loans O The Rate that banks charge each other for overnight loans O The rate set for...
Multiple choice. Circle the best answer. 3 points each 1) Silver is an example of a...
Multiple choice. Circle the best answer. 3 points each 1) Silver is an example of a A) commodity money, B) barter money, C) fiat money. D) representative money. 2. Which of the following functions of money would be violated if inflation were high? A) unit of account B) store of value C) certificate of gold D) medium of exchange 3. If nominal GDP is $600 billion and the money supply is SO billion, the velocity of money is A) 0.125....
2. Determine whether consumers suddenly becoming more concerned about permanent income than about current income would make fiscal policy more effective or less effective
Response Questions Part A To D Determine whether each of the following, other factors held constant, would lead to an increase, a decrease, or no change in the level of real GDP demanded: a. A decrease in government purchases b. An increase in taxes c. A reduction in transfer payments d. A decrease in the marginal propensity to consume
7. Those who advocate counter-cyclical fiscal policy would agree with all but one of the following statements. Which is the exception? A) Governments should be non-interventionist. B) Automatic stabilizers are not particularly effective. C) The economy is not capable of automatic self-adjustment in response the problems of unemployment and inflation. D) Counter cyclical fiscal policy is a powerful and effective tool. E) Government budget deficits are a less serious problem than income gaps. 8. Assume that the economy is in...
Consider an economy with an inflationary gap. The advantage of using a contractionary fiscal policy rather than allowing the economy's natural adjustment mechanism to operate is that O A private sector expenditures increase on their own, the policy will stabilize real GDP. OB. It will shorten what might otherwise be a long recession OC. will reduce the inflationary pressure on prices that would otherwise ocur. OD. It wil dose the output gap. Click to select your answer MacBook Air Assume...
Fiscal Policy O is always effective Can include raising interest rates and buying bonds Includes changes in taxes or government spending O is conducted by the FED D Question 17 The number of federal banks is O 100 O 12 O 454 07 Question 18 What is the Discount Rate O The rate that the Fed charges banks The rate set for student loans O The Rate that banks charge each other for overnight loans O The rate set for...
Multiple choice. Circle the best answer. 3 points each 1) Silver is an example of a A) commodity money, B) barter money, C) fiat money. D) representative money. 2. Which of the following functions of money would be violated if inflation were high? A) unit of account B) store of value C) certificate of gold D) medium of exchange 3. If nominal GDP is $600 billion and the money supply is SO billion, the velocity of money is A) 0.125....
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