According to chapter 16, which deals with fiscal policy, a tax reduction can be used as an expansionary fiscal policy tool to expand the economy. Do you believe in a tax reduction for large corporations and the very rich? Can you think of ways in which a tax reduction for the wealthy can actually help the economy? How about the current fiscal stimulus package (The Care Act)? How will affect future government debt?
Most of the fiscal expansion used for enhancing the development
of the economy and promotion of the employment opportunities. The
expansion of fiscal policy through cutting tax rate and increasing
government spending. There is a high level channelization of
resources among all over the economy. This distribution will be in
both among rich and poor. This tax cuts have different influence
over high income people and low income people. Tax cut among high
income people will help them to consume invest more. This will
improve their standard of living. On the other hand, tax cut among
low income group people will increase the level of disposable
income. They can consume the goods which is high tax before, but
later it is affordable for them. This will attain social welfare
and raise the economic growth.
In current period, there is a drastic change in fiscal stimulus
package. At present government support is important for every
economy. Adoption of efficient stimulus package will help to
maintain the up and down nature of the economy. IMF provides high
level stimulation packages and high flow of fund to the
unanticipated condition. The government expenditure was mainly done
through high level borrowings. This will lead to future government
debt and it may leads to contraction policies in future. This will
affect the economic growth and development also. But the past
expansionary polices will induce the production and growth, so this
borrowings will be pay back and economy tried to consist in the
normal level.
According to chapter 16, which deals with fiscal policy, a tax reduction can be used as...
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....
Which of the following represents the most expansionary fiscal policy? Multiple Choice a $10 billion tax cut a $10 billion increase in government spending a $10 billion tax increase a $10 billion decrease in government spending
** 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...
a Suppose the Canadian economy is in inflationary gap. Explain how fiscal policy is used by the government to close the gap. Explain all the steps. b. How a government can reduce consumption expenditure? How decrease in consumption expenditure will affect economy with inflationary gap.
2. Suppose the Canadian economy is in inflationary gap. Explain how fiscal policy is used by the government to close the gap. Explain all the steps. b. How a government can reduce consumption expenditure? How decrease in consumption expenditure will affect economy with inflationary gap.
(1) Which of the following is not a tool of fiscal policy? Government spending Taxes Tax incentives Private investment (2) Which of the following statements helps to explain why the economy can be slow to recover from a recession? Workers are less motivated because of reduced expectations, which reduces total output. There is not as much money in circulation to fuel new investment. Wages do not fall quickly, which delays an adjustment to a higher output level....
Which of the following expansionary fiscal policy changes would be most favored by those economists who think that the government is too large and inefficient? Multiple Choice a $40 billion tax cut o $10 billion tax cut and $30 billion Increase in government spending o $20 billion tax cut and $20 billion increase in government spending o $40 bilion incresse in government spending Which of the following expansionary fiscal policy changes would be most favored by those economists who think...
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...
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...
Course: Topic: BUSI2003 Macroeconomics Fiscal Policy (billions of CS) Government Tax Government Surplus or National Revenues Expenditure Deficit Debt 100 2007 2008 2009 2010 2011 2012 604 647 633 612 610 615 578 610 631 645 650 648 1. Why did the tax revenues decline from 2008 to 20117 2. If the economy experienced a severe recession from 2008, why didn't the Government expenditure decrease in those years? 3. How did the Government's budget balance evolve over time? 4. How...