The Keynesian approach to fiscal policy assumes that changes in government spending cause direct offsets in both consumption and investment spending. A. False B. True
The correct answer is: False
Reason: Increase in government spending increases consumption and investment expnediture and vice versa.
Thanks!
The Keynesian approach to fiscal policy assumes that changes in government spending cause direct offsets in...
When considering a change in government spending in the traditional Keynesian model , which of the following expenditures is considered an offset to government spending? A. Investment. B. Net exports. C. Consumption. D. None of these above are considered offsets.
A key feature of the traditional Keynesian approach to fiscal policy is the assumption that the price level is variable. A. True B. False
describe the Classical economists’ approach and the Keynesian economic approach to fiscal policy.
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...
Explain how fiscal policy (government spending and taxes) and monetary policy (determining interest rates) affect the level of output and employment in the economy according to Keynesian theory. What fiscal and monetary policies should the government follow to pull the economy out of a recession?
Compare the effects of an expansionary fiscal policy action—an increase in government spending financed by government bond sales to the public, for example—in the Keynesian and classical models. Include in your answer the effects of this policy shift on the level of real income, employment, the price level, and the rate of interest.
If crowding out exists, contractionary fiscal policy will cause the aggregate demand curve to shift in by more than indicated by the government spending multiplier. True False
Estimating the Effect of Fiscal Policy on Output Suppose an economist finds that government spending is negatively correlated with output growth. That is, in periods in which government spending is greater than normal that output growth is, on average, relatively low and in periods in which government spending is less than normal that output growth is, on average, relatively high. Should we take this as evidence against a Keynesian model in which an increase in government spending leads to an...
a) Some economists claim that the government should always use monetary policy to stabilize (or target) the real interest rate in the short-run if they also wish to keep the resulting impact on (changes to) consumption to a minimum. Is this claim true, false or uncertain? Explain by using words and one IS/LM diagram. b) The government should always use monetary policy to combat the effect of business cycle fluctuations coming from changes in autonomous government spending on goods &...
Describe the Keynesian "multiplier effect". That is, how does the government spending $100B ultimately cause more economic impact beyond the initial spending?