If the economy is in an inflationary gap, what kind of contractionary fiscal policy can the...
If the economy is in an inflationary gap, what kind of contractionary fiscal policy can the government use to bring the economy back to macroeconomic equilibrium?
Homework Answers
Answer : Inflationary gap can be eliminate by the contractionary fiscal policy. In case of contractionary fiscal policy the government either increase the tax rate or decrease the government spending. As a result, aggregate demand decrease which shift the AD curve to leftward and the economy reach at macroeconomic equilibrium. Therefore, to eliminate the inflationary gap the government either increase the tax rate or decrease the government spending by using contractionary fiscal policy.
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If the economy is in an inflationary gap, what kind of
contractionary fiscal policy can the...
a Suppose the Canadian economy is in inflationary gap. Explain how fiscal policy is used by...
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.
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...
2. Suppose the Canadian economy is in inflationary gap. Explain how fiscal policy is used by...
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.
What is a contractionary fiscal policy? When would an economy ever pursue a contractionary fiscal policy?...
What is a contractionary fiscal policy? When would an economy ever pursue a contractionary fiscal policy? When was the last time the US government pursued a contractionary fiscal policy? What did it do? What was the result.
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...
1. Suppose in a simple closed economy with MPC = 0.75, the planned investment spending nas...
1. Suppose in a simple closed economy with MPC = 0.75, the planned investment spending nas suddenly fallen, reducing AD and output to a level that below the natural level of output by 100 Million. Assume that the real interest rate is constant so that there is no crowding out of (gross) investment. (a) If the government decided to try to get the output back to the natural level of output using only a change in government spending (AG), by...
3.The Multiplier and returning the economy to Equilibrium a. List expansionary and contractionary tools of fiscal...
3.The Multiplier and returning the economy to Equilibrium a. List expansionary and contractionary tools of fiscal policy b. Assume C=$12,300 +.6 Dl and graph an economy in the AD AS model with Potential Output of $600 and Real GDP at $450. Identify typical levels of unemployment and inventory change in this gap. c. Calculate the change in unemployment insurance needed to close the gap. Show all work d. Assume government spending changes by $50, what is the impact on AD?
suppose the actual GDP is $15 trillion & the potential real GDP is $18 trillion. If the MPS is .03 What kind of GDP is this economy experiencing? what kind fiscal policy & monetary policy woul...
suppose the actual GDP is $15 trillion & the potential real GDP is $18 trillion. If the MPS is .03 What kind of GDP is this economy experiencing? what kind fiscal policy & monetary policy would u recommend to eliminate the gap (include a graph to illustrate the relationship) By how much the government should change taxes to eliminate the gap?
What fiscal policy would you recommend to eliminate the inflationary or recessionary gap in the following...
What fiscal policy would you recommend to eliminate the inflationary or recessionary gap in the following scenarios: Real GDP $44,500; potential GDP $46,200; mpe 0.2. O A. If the mpe is 0.2, the multiplier is 1.25. Because there is a recessionary gap of $1,700, the government should increase expenditures by $1,360 or decrease taxes by $6,800. O B. If the mpe is 0.2, the multiplier is 1.25. Because there is an inflatonary gap of $1,700, the government should decrease expenditures...
Econ HW, please help! UTION # FISCAL POLICY NAME the mix of government spending and taxing...
Econ HW, please help!
UTION # FISCAL POLICY NAME the mix of government spending and taxing in order to balance the Fiscal policy is best defined as: uncontrolled government spending, altering the mix of govern budget every fiscal year. changes in govern macroeconomic goals. vernment spending and taxing for the purpose of achieving certain minimizing government expenditures over the fiscal year. , while reases in government spending and lower taxes represent decreases in government spending and higher taxe contractionary fiscal...
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.
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...
1. Suppose in a simple closed economy with MPC = 0.75, the planned investment spending nas suddenly fallen, reducing AD and output to a level that below the natural level of output by 100 Million. Assume that the real interest rate is constant so that there is no crowding out of (gross) investment. (a) If the government decided to try to get the output back to the natural level of output using only a change in government spending (AG), by...
3.The Multiplier and returning the economy to Equilibrium a. List expansionary and contractionary tools of fiscal policy b. Assume C=$12,300 +.6 Dl and graph an economy in the AD AS model with Potential Output of $600 and Real GDP at $450. Identify typical levels of unemployment and inventory change in this gap. c. Calculate the change in unemployment insurance needed to close the gap. Show all work d. Assume government spending changes by $50, what is the impact on AD?
What fiscal policy would you recommend to eliminate the inflationary or recessionary gap in the following scenarios: Real GDP $44,500; potential GDP $46,200; mpe 0.2. O A. If the mpe is 0.2, the multiplier is 1.25. Because there is a recessionary gap of $1,700, the government should increase expenditures by $1,360 or decrease taxes by $6,800. O B. If the mpe is 0.2, the multiplier is 1.25. Because there is an inflatonary gap of $1,700, the government should decrease expenditures...
Econ HW, please help!
UTION # FISCAL POLICY NAME the mix of government spending and taxing in order to balance the Fiscal policy is best defined as: uncontrolled government spending, altering the mix of govern budget every fiscal year. changes in govern macroeconomic goals. vernment spending and taxing for the purpose of achieving certain minimizing government expenditures over the fiscal year. , while reases in government spending and lower taxes represent decreases in government spending and higher taxe contractionary fiscal...
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