1. What should a government do with its spending and taxes during a recession? Why? 2....
1. What should a government do with its spending and taxes during a recession? Why?
2. What should a government do with its spending and taxes during an upturn in the business cycle? Why?
Homework Answers
1.Government should increase its spending and reduce the tax rate during recession.These policies raise the aggregate demand which further raises GDP.It is also called fiscal expansion
2.The government can reduce its spending and increase tax rate during upturn .This is called fiscal contraction.Fiscal contraction reduces aggregate demand,which further reduces GDP and price level.
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1. What should a government do with its spending and taxes during a recession? Why? 2....
(1) Which of the following is not a tool of fiscal policy? Government spending Taxes Tax...
(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....
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending....
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending. b) The rapid increase and subsequent decline in housing prices. c) Foreign countries reducing their demand for American Goods. d) Baby Boomers retiring from the economy. 6) Suppose that the economy is experiencing a recessionary gap. If you believe in "small government", then the most appropriate policy would be to a) Raise income taxes. b) Lower income taxes. c) Raise government spending. d) Lower...
1. If the government does not need taxes and bonds to finance its expenditures, why then...
1. If the government does not need taxes and bonds to finance its expenditures, why then does it levy taxes and sell bonds? What is the role of taxes and government spending?
1. During the Great Recession, the government stimulus spending included the provision of extending unemployment insurance...
1. During the Great Recession, the government stimulus spending included the provision of extending unemployment insurance benet. What would be the possible effect on economic growth predicted by static scoring? How about by dynamic scoring? Explain.
1. If the government does not need taxes and bonds to finance its expenditures, why then does it levy taxes and sell bon...
1. If the government does not need taxes and bonds to finance its expenditures, why then does it levy taxes and sell bonds? What is the role of taxes and government spending?
(1) Calculate the government spending multiplier if, an increase in government spending by $5 million increases...
(1) Calculate the government spending multiplier if, an increase in government spending by $5 million increases real GDP by $20 million. Group of answer choices 0.20 0.25 2 5 4 (2) A major benefit of automatic stabilizers is that they: Group of answer choices guarantee a balanced budget over the course of the business cycle. have a tendency to reduce the national debt. moderate the effect of fluctuations in the business cycle. require legislative review by Congress before they can...
Application Activities: Define fiscal policy and its key objectives. What government agencies are responsible for making...
Application Activities: Define fiscal policy and its key objectives. What government agencies are responsible for making decisions on fiscal policy actions and implementations? Critically and briefly describe the following fiscal policy tools and their relative effectiveness in controlling business cycle fluctuations such as state of recession and/or state of inflation. How do they operate during recession and inflation? Draw AD-AS diagram of macroeconomics model to illustrate your explanation in words Government Spending Tax Policy Define monetary policy and its key...
The government of an economy has increased its spending and taxes by the same amount. What...
The government of an economy has increased its spending and taxes by the same amount. What is the effect on investment?
During the Great Recession, the government stimulus spending included the provision of extending unemployment insurance benet....
During the Great Recession, the government stimulus spending included the provision of extending unemployment insurance benet. What would be the possible effect on economic growth predicted by static scoring? How about by dynamic scoring? Explain.
Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the governm...
Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the government tax multiplier? A)-1.33 B) - 25 C) - 75 D) -4 E) -3 , which the recessionary gap. 2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c Decrease, increases d) Increase, decreases 3) Suppose that the MPC is.75 and the US Federal Government reduces taxes by 10 million dollars. After 3 rounds of...
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending. b) The rapid increase and subsequent decline in housing prices. c) Foreign countries reducing their demand for American Goods. d) Baby Boomers retiring from the economy. 6) Suppose that the economy is experiencing a recessionary gap. If you believe in "small government", then the most appropriate policy would be to a) Raise income taxes. b) Lower income taxes. c) Raise government spending. d) Lower...
Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the government tax multiplier? A)-1.33 B) - 25 C) - 75 D) -4 E) -3 , which the recessionary gap. 2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c Decrease, increases d) Increase, decreases 3) Suppose that the MPC is.75 and the US Federal Government reduces taxes by 10 million dollars. After 3 rounds of...
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