why does the budget surplus get smaller or th deficit get larger even without discretionary fiscal...
Homework Answers
Government budget is the difference between the revenue received and the expenditure committed. The expenditure part is composed of government spending on goods and services, as well as transfer payments such as unemployment benefits. If there is an unemployment then there will be an increase in unemployment benefits. This will increase the expenditure part of the budget. As a result, if there was a budget surplus it will now be reduced and if there was a budget deficit it would be larger.
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why does the budget surplus get smaller or th deficit get
larger even without discretionary fiscal...
** 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...
1,2,3,4,5,6,7,8,9,10 1.Explain 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 po...
1,2,3,4,5,6,7,8,9,10 1.Explain 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? 6.What are...
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...
5. Which type of fiscal policy creates budget deficit and why? Should we put more emphasis...
5. Which type of fiscal policy creates budget deficit and why? Should we put more emphasis on budget eficit or the fiscal policy? (2 + 3 points)
Answer all of them or do not answer Q8. Why does balance of payment always balance...
Answer all of them or do not answer
Q8. Why does balance of payment always balance even when balance of trade may not be in balance? How does the US government pay for its chronic trade deficit of over $400 billion per year for so many years? Does this trade deficit matter in the long run? 09. How can monetary policy actions reduce the trade deficit? How might the increase in budget deficit from expansionary fiscal policy increase the trade...
QUESTION 1 Which of the following is an example of an automatic fiscal policy stabilizer? a....
QUESTION 1 Which of the following is an example of an automatic fiscal policy stabilizer? a. Tax revenues fall as real GDP decreases. b. Congress decides to cut spending on national defense. c. Congress cuts individual income tax rates. d. Tax revenues rise after Congress raises corporate tax rates. QUESTION 7 When a country's economy is producing at a level that is less than its potential GDP, the standardized employment deficit will show a ________ than the actual deficit. a....
What effect does a contractionary fiscal policy have on the federal budget and private investment? Select...
What effect does a contractionary fiscal policy have on the federal budget and private investment? Select the correct answer below: It increases the surplus, leading to crowding out. It decreases the surplus, leading to crowding in. It increases the deficit, and crowds out private investment. It decreases the deficit, and encourages private investment.
Governments may wish to increase output without running a budget deficit. The question is whether policy...
Governments may wish to increase output without running a budget deficit. The question is whether policy changes in government spending G and net taxes T that maintain a balanced budget can result in changes in economic output Y. To start, consider the equilibrium condition in the goods market, given by 1. a) By how much does Y increase when G increases by one unit? b) By how much does Y decrease when T increases by one unit? c) Why are...
Q1) Q2) Q3) Q4) Q5) What is the distinction between automatic and discretionary fiscal policy? Choose...
Q1)
Q2)
Q3)
Q4)
Q5)
What is the distinction between automatic and discretionary fiscal policy? Choose the correct statements. a. A fiscal policy action initiated by an act of Parliament is called discretionary fiscal policy. b. All fiscal stimulus is discretionary. c. The fiscal stimulus act passed by the U.S. government in 2008 is an example of automatic fiscal policy. d. Fiscal stimulus is the use of fiscal policy to increase production and employment. O A. Statements a and c...
14. (2 pt) Explain the effect of a discretionary cut in taxes of $40 billion on...
14. (2 pt) Explain the effect of a discretionary cut in taxes of $40 billion on the economy when the economy's MPC is .75. How does this discretionary fiscal policy differ from a discretionary increase in government spending of $40 billion? A tax cut of $40 billion will result in initial increase in consumption of S billion). (Note that $10Bil. is saved based on marginal propensity to save (MPS), that is 25 (because 1-MPC-MPS). Then .25 x $40-$10 billion). This...
** 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...
5. Which type of fiscal policy creates budget deficit and why? Should we put more emphasis on budget eficit or the fiscal policy? (2 + 3 points)
Answer all of them or do not answer
Q8. Why does balance of payment always balance even when balance of trade may not be in balance? How does the US government pay for its chronic trade deficit of over $400 billion per year for so many years? Does this trade deficit matter in the long run? 09. How can monetary policy actions reduce the trade deficit? How might the increase in budget deficit from expansionary fiscal policy increase the trade...
Governments may wish to increase output without running a budget deficit. The question is whether policy changes in government spending G and net taxes T that maintain a balanced budget can result in changes in economic output Y. To start, consider the equilibrium condition in the goods market, given by 1. a) By how much does Y increase when G increases by one unit? b) By how much does Y decrease when T increases by one unit? c) Why are...
Q1)
Q2)
Q3)
Q4)
Q5)
What is the distinction between automatic and discretionary fiscal policy? Choose the correct statements. a. A fiscal policy action initiated by an act of Parliament is called discretionary fiscal policy. b. All fiscal stimulus is discretionary. c. The fiscal stimulus act passed by the U.S. government in 2008 is an example of automatic fiscal policy. d. Fiscal stimulus is the use of fiscal policy to increase production and employment. O A. Statements a and c...
14. (2 pt) Explain the effect of a discretionary cut in taxes of $40 billion on the economy when the economy's MPC is .75. How does this discretionary fiscal policy differ from a discretionary increase in government spending of $40 billion? A tax cut of $40 billion will result in initial increase in consumption of S billion). (Note that $10Bil. is saved based on marginal propensity to save (MPS), that is 25 (because 1-MPC-MPS). Then .25 x $40-$10 billion). This...
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