ZuoTi.Pro
Question

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 by $1,360 or increase taxes by $6,800. C. If the mpe is 0.2, the multiplier is 1.25. Because there is a recessionary gap of $1,700, the government should decrease expenditures by $1,360 or increase taxes by $6,800. D. If the mpe is 0.2, the multiplier is 1.25. Because there is an inflatonary gap of $1,700, the government should increase expenditures by $1,360 or decrease taxes by $6,800.

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Olton A 17o0 12s Tar in utrk.loets Mfc o 2-a.25 Thee, Bacause there u othen

0 0
Add a comment
Know the answer?
Add Answer to:
What fiscal policy would you recommend to eliminate the inflationary or recessionary gap in the following...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • QUESTION 20 One way to reduce the recessionary gap through fiscal policy is to increase government...

    QUESTION 20 One way to reduce the recessionary gap through fiscal policy is to increase government purchases. O increase taxes. O decrease transfer payments. O decrease the MPC. Click Save and Submit to save and submit. Click Save All Answers to save all answers.

  • Fiscal Policy Assume the economy is in a recession. The recessionary output gap has been identified...

    Fiscal Policy Assume the economy is in a recession. The recessionary output gap has been identified as $500 billion dollars. The Federal Government wants to act to combat the recession. 1. (4 points) Past data suggests that a $10 million change in spending caused a $200 million change in total output. Use this information to calculate the Government Spending Multiplier. In one sentence, give a definition of the multiplier. 2. (6 points) Using your answer in part (1) calculate the...

  • 4a. The government of Peru is facing an inflationary gap. Presume they plan a tax increase...

    4a. The government of Peru is facing an inflationary gap. Presume they plan a tax increase of $35 billion and spending decreases of $15 Billion. The MPC for the country is 0.55. We are curious what the fiscal impact will be from the policy. What would be the total decrease in GDP based on the fiscal multiplier using the data above? 4b. Let's use a more realistie multiplier - Let's add some realism to the exercise and include the effects...

  • The economy is in a recession and the recessionary gap is large. A discretionary fiscal stimulation...

    The economy is in a recession and the recessionary gap is large. A discretionary fiscal stimulation package that would avoid a budget deficit is a simultaneous and equal increase in government expenditure and an increase in taxes. decrease in government expenditure and taxes. increase in transfer payments and a decrease in taxes, decrease in transfer payments and increase in the quantity of money increase in transfer payments and decrease in the quantity of money

  • The economy is in a recession and the recessionary gap is large. Describe a discretionary fiscal...

    The economy is in a recession and the recessionary gap is large. Describe a discretionary fiscal stimulus package that could be used that would not bring an increase in the budget deficit. A discretionary fiscal stimulation package that would avoid a budget deficit is a simultaneous and equal​ ______.     A. increase in government expenditure and an increase in taxes B. decrease in government expenditure and taxes C. decrease in transfer payments and increase in the quantity of money D. increase...

  • 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...

  • The graph shows an economy that is above full employment. To restore full employment, the government...

    The graph shows an economy that is above full employment. To restore full employment, the government decreases government expenditure by $0.5 trillion. Draw a curve to show the effect of the decrease if this is the only change in spending plans. Label the curve AD0-ΔE The decrease 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 Draw a point at the full-employment equilibrium...

  • 7. Those who advocate counter-cyclical fiscal policy would agree with all but one of the following...

    7. Those who advocate counter-cyclical fiscal policy would agree with all but one of the following statements. Which is the exception? A) Governments should be non-interventionist. B) Automatic stabilizers are not particularly effective. C) The economy is not capable of automatic self-adjustment in response the problems of unemployment and inflation. D) Counter cyclical fiscal policy is a powerful and effective tool. E) Government budget deficits are a less serious problem than income gaps. 8. Assume that the economy is in...

  • 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?

  • 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...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT