when an economy is already at full employment, what is the outcome of expansionary fiscal policies...
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when an economy is already at full employment, what is the
outcome of expansionary fiscal policies...
If the effects of expansionary fiscal policy hits when the economy is already expanding a. The...
If the effects of expansionary fiscal policy hits when the economy is already expanding a. The effects could lead to even deeper recession b. The policy will have no effect c. The policy is called an automatic stabilizer d. It may lead to excessive aggregate demand and inflation e. It will lead to stagflation
Refer to the above diagram, in which Qf is the full-employment output. An expansionary fiscal policy...
Refer to the above diagram, in which Qf is the
full-employment output. An expansionary fiscal policy would be most
appropriate if the economy's present aggregate demand curve were
at:
Question 3 options:
AD0.
AD2.
AD3.
None of these.
AD3 AS AD AD, AD C3 Real GDP
FISCAL POLICY IN-CLASS WORKSHEET 2 This question explores the role of expansionary and contractionary fiscal policy...
FISCAL POLICY IN-CLASS WORKSHEET 2 This question explores the role of expansionary and contractionary fiscal policy in the Aggregate Demand and Aggregate Supply model. You will use schedules for an aggregate demand line and an aggregate supply line to identify the equilibrium price level and real GDP in a macroeconomy. Additionally, you will compare the short-run equilibrium level of real GDP to the full employment level of real GDP to identify desirable fiscal policies. Below, you are provided the schedules...
a. At time T, what is the economy experiencing? Full-employment output An economic contraction An economic expans...
a. At time T, what is the economy experiencing?
Full-employment output
An economic contraction
An economic expansion
b. In order to smooth out the business cycle, what type of
fiscal policy should the government undertake?
Contractionary fiscal policy
Expansionary fiscal policy
c. What type of actions might the government take?
An increase in taxes and a decrease in government purchases
An increase in both taxes and government purchases
A decrease in taxes and an increase in government purchases
A decrease...
1. If the economy is at full employment, increases in government spending: A) have a multiplier...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
Figure: Effects of Contractionary Fiscal Policies LRAS SRAS AD Aggregate Output (Q) ot t Expansionary fiscal...
Figure: Effects of Contractionary Fiscal Policies LRAS SRAS AD Aggregate Output (Q) ot t Expansionary fiscal policy should be used to ensure a higher price level Contractionary fiscal policies should be used to reduce inflation Contractionary fiscal policy should be used to ensure a higher price level Expansionary fiscal policy should be used to increase aggregate demand Which of the following statements is true regarding the diagram above
Suppose we are producing at the full-employment level and the current fiscal program is associated with...
Suppose we are producing at the full-employment level and the current fiscal program is associated with a balanced budget. What will be true if the Fed suddenly decides to implement expansionary monetary policy? The new appropiate fiscal policy will create a budget deficit The new appropiate fiscal policy will create a budget surplus If federal government doesn't change the fiscal program, the economy will end up with lower output and higher price All of the above
The central idea of fiscal policy is that? planned deficits are undertaken during an expansionary gap...
The central idea of fiscal policy is that? planned deficits are undertaken during an expansionary gap and planned surpluses undertaken during a contractionary gap the balanced budget approach is the proper criterion for stabilizing the economy actual deficits should equal actual surpluses during a contractionary gap. deficits are planned during contractionary gap and surpluses are utilized to restrain an expansionary gap the key to fighting inflation is planning budget deficits
During a recession, economists traditionally focus on monetary and fiscal policies to bolster the economy. a. Use t...
During a recession, economists traditionally focus on monetary and fiscal policies to bolster the economy. a. Use the aggregate demand - aggregate supply (AD-AS) model in Panel A to show the effect of a tax cut, in the form of a tax rebate, given to each taxpayer. If inflation is high during a recession, some economists advocate cuts on marginal tax rates, to help avoid additional inflation. b. Use the AD-AS model in Panel B to show the effect of...
The graph shows an economy below full employment. To restore full employment, the government incr...
The graph shows an economy below full employment. To restore full employment, the government increases government expenditure by $0.5 trillion. Draw a curve to show the effect of the increase if it is the only change in spending plans. Label the curve ADo AE Price level (GDP price index, 2009-100) Potential GDP The increase in government expenditure sets off a multiplier process. Draw a curve that shows the multiplier effect that returns the economy to full employment. Label it AD,...
Refer to the above diagram, in which Qf is the
full-employment output. An expansionary fiscal policy would be most
appropriate if the economy's present aggregate demand curve were
at:
Question 3 options:
AD0.
AD2.
AD3.
None of these.
AD3 AS AD AD, AD C3 Real GDP
a. At time T, what is the economy experiencing?
Full-employment output
An economic contraction
An economic expansion
b. In order to smooth out the business cycle, what type of
fiscal policy should the government undertake?
Contractionary fiscal policy
Expansionary fiscal policy
c. What type of actions might the government take?
An increase in taxes and a decrease in government purchases
An increase in both taxes and government purchases
A decrease in taxes and an increase in government purchases
A decrease...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
Figure: Effects of Contractionary Fiscal Policies LRAS SRAS AD Aggregate Output (Q) ot t Expansionary fiscal policy should be used to ensure a higher price level Contractionary fiscal policies should be used to reduce inflation Contractionary fiscal policy should be used to ensure a higher price level Expansionary fiscal policy should be used to increase aggregate demand Which of the following statements is true regarding the diagram above
During a recession, economists traditionally focus on monetary and fiscal policies to bolster the economy. a. Use the aggregate demand - aggregate supply (AD-AS) model in Panel A to show the effect of a tax cut, in the form of a tax rebate, given to each taxpayer. If inflation is high during a recession, some economists advocate cuts on marginal tax rates, to help avoid additional inflation. b. Use the AD-AS model in Panel B to show the effect of...
The graph shows an economy below full employment. To restore full employment, the government increases government expenditure by $0.5 trillion. Draw a curve to show the effect of the increase if it is the only change in spending plans. Label the curve ADo AE Price level (GDP price index, 2009-100) Potential GDP The increase in government expenditure sets off a multiplier process. Draw a curve that shows the multiplier effect that returns the economy to full employment. Label it AD,...
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