Homework Answers
a higher return on saving decreases the amount a household needs to save to achieve any target level of future consumption. this effect is called the substitution effect . if income effect is large enough, then a reduction in taxes on saving might increase tax revenues
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Question 8- Fiscal policy: A higher return on saving save to achieve any target level of future c...
6.3 Explain the effect that each of the following fiscal policy measures could have on aggregate...
6.3 Explain the effect that each of the following fiscal policy measures could have on aggregate supply a. The reduction of taxes on capital gains b. Reducing the higher marginal individual income tax rates to the same level as the company income tax rate C. Increasing the marginal income tax rates paid by individuals.
1. When countries have severe debt problems: fiscal policy is an especially good idea. expansionary fiscal...
1. When countries have severe debt problems: fiscal policy is an especially good idea. expansionary fiscal policy can reduce real growth. it makes no difference for fiscal policy. they can continue to borrow forever without any adverse consequences. 2. Increases in government spending financed through additional borrowing will typically: lead to higher taxes. lead to higher interest rates. stimulate both consumption and investment. provide more stimulus than when government spending is financed through higher taxes. 3. In a recession, automatic...
Q1) Q2) Q3) Q4) Q5) What is the distinction between automatic and discretionary fiscal policy? Choose...
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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...
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....
Among the most important problems of implementing fiscal policy include all except which of the following?...
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...
1.The maintenance of general economic stability relies most heavily on: A. Federal fiscal policy B. Coordinated...
1.The maintenance of general economic stability relies most heavily on: A. Federal fiscal policy B. Coordinated state and local fiscal policies C. Tax and revenue policies of state governments D. Federal aid to the states 2.If we passed a constitutional amendment requiring a balanced budget every year, this would probably A. prevent recessions. B. make our recessions into depressions. C. create inflations. D. raise interest rates. 3.If the President says he will request higher taxes if price increases accelerate, the...
Topic: Tobacco products The government's tax/subsidy policy in these areas and any objectives of the tax...
Topic: Tobacco products The government's tax/subsidy policy in these areas and any objectives of the tax policy. In the United States, federal, state, and local governments tax tobacco. Tobacco products are taxed in two ways: the unit tax, which is based on a constant nominal rate per unit (that is, per pack of cigarettes), and the ad valorem tax, which is based on a constant fraction of either wholesale or retail price. Currently, federal taxes on cigarettes, small cigars, and...
Consider an economy in which taxes, planned investment, government spending on goods and services, and net...
Consider an economy in which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and planned investment change as the interest rate changes. You are given the following information concerning autonomous consumption, the marginal propensity to consume, planned investment, government purchases of goods and services, and net exports: Ca = 1,500 – 10r; c = 0.6; Ta = 1,800; Ip = 2,400 – 50r; G = 2,000; NX = -200 (a)Derive Ep and...
Question 12 1 pts The fraction, or percentage, of total income that is consumed is called...
Question 12 1 pts The fraction, or percentage, of total income that is consumed is called the break-even income. consumption schedule. marginal propensity to consume. average propensity to consume. Question 14 1 pts The effect of a decline in taxes on the level of income will differ somewhat from an increase in government expenditures of the same amount because tax declines tend to be more expansionary households may not spend all of an increase in disposable income. the MPC that...
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a....
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending! c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
6.3 Explain the effect that each of the following fiscal policy measures could have on aggregate supply a. The reduction of taxes on capital gains b. Reducing the higher marginal individual income tax rates to the same level as the company income tax rate C. Increasing the marginal income tax rates paid by individuals.
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...
Question 12 1 pts The fraction, or percentage, of total income that is consumed is called the break-even income. consumption schedule. marginal propensity to consume. average propensity to consume. Question 14 1 pts The effect of a decline in taxes on the level of income will differ somewhat from an increase in government expenditures of the same amount because tax declines tend to be more expansionary households may not spend all of an increase in disposable income. the MPC that...
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending! c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
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