8. (2010-5) Which of the following is an example of fiscal policy? (A) Increasing government expenditures to build highways (B) Increasing the money supply to increase income (C) Decreasing the discount rate to lower unemployment and inflation (D) Decreasing the federal funds rate to stimulate investment (E) Decreasing the reserve ratio to increase bank reserves 9. (2010-41) If the economy was in a severe recession, the most expansionary fiscal policy would be to (A) decrease both personal income taxes and government spending by equal amounts (B) decrease both the reserve requirement and government spending by the same proportion (C) decrease personal income taxes and increase government spending by equal amounts (D) increase the money supply and increase government spending by the same proportion (E) increase social security taxes and increase government spending by equal amounts

8. (2010-5) Which of the following is an example of fiscal policy? (A) Increasing government expenditures to build highways (B) Increasing the money supply to increase income (C) Decreasing the discount rate to lower unemployment and inflation (D) Decreasing the federal funds rate to stimulate investment (E) Decreasing the reserve ratio to increase bank reserves 9. (2010-41) If the economy was in a severe recession, the most expansionary fiscal policy would be to (A) decrease both personal income taxes and government spending by equal amounts (B) decrease both the reserve requirement and government spending by the same proportion (C) decrease personal income taxes and increase government spending by equal amounts (D) increase the money supply and increase government spending by the same proportion (E) increase social security taxes and increase government spending by equal amounts

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter30: Government Budgets And Fiscal Policy

Section: Chapter Questions

Problem 20RQ: Give some examples of changes in federal spending and taxes by the government that would be fiscal...

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10. From the following data about a government budget, find out the following: ) Revenue deficit (ii) Fiscal deficit (iii) Primary deficit S.No. Contents 7 (in Arab) (a) Capital Receipts Net of Borrowings 95 (b) Revenue Expenditure 100 (c) Interest Payments 10 (d) Revenue Receipts 80 (e) Capital Expenditure 110
3 Fiscal Policy and how it can be implemented in a recessionary gap. Recently, COVID-19 has resulted in many government officials issuing executive orders to shelter in place as a way to fight surge in COVID-19 cases, except for those working in industries that provide essential needs. How might this impact the nation’s productivity, and what can the government do in response?
3. The economy of Country Zeta is in long-run equilibrium; however, the government is concerned about the size of the national debt. (a) Identify one specific fiscal policy action the government could take to reduce the national debt. (b) Draw a correctly labeled graph of the loanable funds market, and show the effect of the fiscal policy action identified in part (a) on the real interest rate. (c) Based on the change in the real interest rate identified in part (b), what will happen to each of the following? (i) Aggregate demand in the short run. Explain. (ii) Potential real output. Explain.
One objection to deficit spending is that it increases the demand for loanable funds thereby putting upward pressure on interest rates that crowds out private investment spending thereby lowering future U.S. growth. (1) What is the general level of interest rates in 2020?
4. Which of the following statements are FALSE? (a) When the government prints money to buy goods and services the resulting inflation is a form of tax, since people will not have to pay more for their goods and services than before. (b) An effective fiscal policy macroeconomic stimulus should aim to replace private spending with public (government) spending. (c) To be effective a fiscal policy macroeconomic stimulus should have temporary increases in spending and permanent tax cuts. (d) The paradox of thrift is that the increase in saving during a recession because people postpone major purposes prolongs the recession and thus is not good for the economy, while normally saving grows the economy.
35) A government reduces its budget deficit, but at the same time people become concerned that the outlook for future government expenditures and revenues increase the chance it will default. Which of the following is correct. The reduced budget deficit will raise interest rates in general. The increased risk of default will raise interest rates on government bonds. a. The reduced budget deficit will raise interest rates in general. The increased risk of default will reduce interest rates on government bonds. The reduced budget deficit will reduce interest rates in general. The increased risk of default will raise interest rates on government bonds. The reduced budget deficit will reduce interest rates in general. The increased risk of default will reduce interest rates on government bonds. b. C. d.
15. What is unemployment? Explain various types of unemployment. 16. Explain the budget deficit and surplus. How the government financed the deficit?
31 - What is the difference between foreign sales revenues and foreign purchase expenses called?A) ExportB) Budget deficitC) Current Account DeficitD) foreign trade deficitE) Net exports
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
5. Which of the following statements are TRUE? (a) In a situation of a sovereign debt crisis Keynesian macroeconomic policy is unavailable because the government is practically unable to borrow. (b) Balancing the national government budget each year is sound macroeconomic policy (c) It is possible and preferable to balance the national government budget over the business cycle. (d) The national debt always implies mortgaging our children's future and thus government should seek to retire as much of this debt as possible. (e) The part of the national debt that is owed to other parts of the national government should not be counted as a problem since it involves the government owing money to itself.
8- A person’s disposable income decreases, and his personal income remains unchanged. This is because of ______. a. Decreased personal taxes b. Increased personal taxes c. Increased corporate taxes d. Unemployment reasons
Text Problem 14-2 Question Help v Suppose that the Office of Management and Budget provides the accompanying estimates of federal budget receipts, federal budget spending, and GDP, all expressed in billions of dollars. Calculate the implied estimates of the federal budget deficit as a percentage of GDP for each year. (Enter each response as a percentage rounded to one decimal place. Do not include a plus or minus sign.) Federal Budget Receipts (2% growth) $2,329.8 Federal GDP Deficit as a % Budget Spending (5% growth) $2,682.6 Year (3% growth) $14,573.2 of GDP 2019 2020 2,376.4 2,816.7 15,010.4 % 2021 2,423.9 2,957.6 15.460.7 2022 2,472.4 3,105.4 15.924.5