4. Which factor is NOT a tool of fiscal policy? (Select All that Apply) A. changing the tax rates B. government purchases of goods and services C. changes in the money supply D. changes in the interest rate to affect the money supply
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- 23)Which of the following is classified as Fiscal Policy? Select one: a. The federal government passes tax cuts to encourage firms to reduce air pollution. b. College students are allowed to deduct tuition costs from their federal income taxes to encourage them to finish their college education. c. The state of Nevada builds a new tollway in an attempt to expand employment in their state d. President Obama enacted the “cash for clunkers” program in the 2008 Recession to increase spending in the economy2. Budget philosophies There are several important philosophies regarding budget balances. One way in which they differ is in terms of the time span over which the budget should be balanced. Another difference among budget philosophies involves whether the budget balance is as important as other economic goals. Which of the following budget philosophies advocates ensuring that the economy reaches its potential output? Functional finance Cyclically balanced budget Annually balanced budget A major problem with the implementation of this philosophy is that it: Magnifies business cycle fluctuations Relies upon government officials to budget for surpluses during boom times in order to cover deficits during recessions Can allow the national debt to burgeon with chronic deficits(25) Which of the following is an example of fiscal policy? Select one: a. A change in tax rates. b. A change in the money supply. c. A change in interest rates. d. A change in the inflation rate. (26) If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals ________. Select one: a. 25% b. 18% c. 32%
- Part A Decide whether each of the following fiscal policies of the federal government is expansionary or contractionary. Write expansionary or contractionary, and explain the reasons for your choice. 1. The government cuts business and personal income taxes and increases its own spending. Expansionary. The decrease in personal income taxes increases disposable income and thus increases consumption spending. The business tax cut increases investment spending, and the increase in government spending increases government demand. 2. The government increases the personal income tax , Social Security tax and corporate income tax Government spending stays the same 3. Government spending goes up while taxes remain the same. 4. The government reduces the wages of its employees while raising taxes on consumers and businesses Other government spending remains the same1. The Multiplier and Fiscal Policy: one of the programs to combat the economic effects of the recession and pandemic was the CARES Act passed in March 2020. One of the provisions of the CARES act was a relief check of $1200 per adult and $500 per dependent child. These payments were actually advance rebates on 2020 taxes and so the payments came from the IRS. This tax cut distributed about $300 billion to most, but not all of the U.S. population. Major exceptions included families with undocumented members (which invalidated the whole family, even those who were legal residents or U.S. citizens), dependent adults (which invalidated many college students as well as seniors living with their children). The program was phased out for individuals making more than $75,000 and married couples earning more than $150,000. Which of the following statements is correct about the multiplier effect of this part of the CARES act? Group of answer choices The multiplier effect would be greater than…1. The federal budgetary process This table shows three stages in the federal budgetary process. Select the appropriate month(s) of action for each of the stages. Stage Presidential budget submission Budget resolution Congressional and presidential approvals Month(s) Which of the following are true of the federal budgetary process? Check all that apply. The budgetary process often goes astray due to delays in Congress. Federal agencies develop and submit their budget requests for the upcoming fiscal year to the Congressional Budget Office (CBO). The Congressional Budget Office (CBO) reports its evaluation at budget hearings in both the House of Representatives and the Senate.
- Topic: Fiscal Policy 1. A government collects $0.35 on every new dollar of income. Of the remaining $0.65 of disposable income, 20% is spent on imports, and 10% of the disposable income is saved. a. What is the marginal propensity to withdraw?b. How much of each new dollar of income is spent on domestic consumption?c. What is the spending multiplier in this economy?Question 10 A government is considering reducing the amount of taxes it collects from its citizens each year. Which of the following is the best argument against the tax reduction? a The government might have a smaller role in the economy. b The government will likely have to produce fewer goods and services with the reduced revenue. c Citizens will not be able to purchase as many goods and services as they could previously. d People do not generally like taxes.Answer part D) Suppose a government has no debt and a balanced budget. Suddenly it decides to spend $5 trillion while raising only $4 trillion worth of taxes. Instructions: Round your responses to one decimal place. a. What will be the government’s deficit? $____billion b. If the government finances the deficit by issuing bonds, what amount of bonds will it issue? $ ______ billion c. At a 3 percent rate of interest, how much interest will the government pay each year? $ ________ billion d. Add the interest payment to the government’s $5 trillion expenditures for the next year, and assume that tax revenues remain at $4 trillion. In the second year, compute the (i) Deficit. $ _________ billion (ii) Amount of new debt (bonds) issued to finance the deficit in the second year. $ ________ billion (iii) Total debt at the end of the second year. $ __________ billion (iv) Debt service requirement. $ _______billion
- 4. Fiscal policy affects aggregate demand because: government spending is a category of aggregate demand. taxes affect corporate spending and so investment. taxes affect disposable income and so consumption. all of the above.What are the effects of an increase in government purchases? (Select all that apply.) A. Decrease in government spending B. Increase in real wages C. Increase in overall GDP D. Increase in aggregate output E. Consumption decreases F. Employment increases(a) The hypothetical information in the following table shows what the situation will be in if the government of Singapore does not use fiscal policy: Year 2020 2021 Potential GDP S$20.1 billion Real GDP S$20.1 billion S$20.1 billion Price Level 110.0 S$20.75 billion 120.5 If the government of Singapore wants to keep its real GDP at its potential level in 2021, determine whether an expansionary or contractionary policy should be applied. i. ii. If government of Singapore is successful in keeping real GDP at its potential level in 2021, discuss what would happen to the level of real GDP, potential real GDP, inflation rate and unemployment rate. iii. Draw an aggregate demand and aggregate supply diagram to illustrate the impacts and changes in (ii). Be certain to include L.RAS curves for 2020 and 2021; SRAS curves for 2020 and 2021; AD curves for 2020 and 2021, with and without fiscal policy action; and equilibrium real GDP and the price level in 2021, with and without fiscal policy.