United States, the various state governments almost all have laws that require them to balance their budgets, every single year. Such a law would require them to ___during a ____ , resulting in a ____ recession. recession ,boom ,bigger, smaller, decrease taxes, increase taxes
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In the United States, the various state governments almost all have laws that require them to balance their budgets, every single year.
Such a law would require them to ___during a ____ , resulting in a ____ recession.
recession ,boom ,bigger, smaller, decrease taxes, increase taxes
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Solved in 2 steps
- The U.S. economy is over a decade removed from the Great Recession. For several years after the Great Recession officially ended, the U.S. grew at an historically slow rate. Analyze the causes of the slow increases in U.S. GDP. An analysis of the fiscal policy approach the Federal Government took to the recoveryCountry D experiences a recession due to a decrease in consumer confidence. There are two economists, Andrew and Betty. Betty suggests the government to do nothing. Andrew suggests the government to implement fiscal policies to revive the economy as soon as possible. If the government adopts Betty’s policy, draw an AD-AS graph to show what happens to the economy in short run and then long run after the decrease in consumer confidence. Suppose the government adopts Andrew’s policy. (i) Will the government increase or decrease spending? (ii) The government cuts the income tax rate. After cutting the income tax rate, the total income tax revenue collected increases. Explain why. (iii) Will Andrew’s policy be more effective if MPC is smaller? Give one advantage of Betty’s policy over Andrew’s policy.Government Spending, Taxes, and Fiscal Policy-End of Chapter Problem The president has just signed a new budget that drastically cuts taxes without decreasing government spending. When asked how he plans to address the dramatic increase in deficits that will occur due to the tax cuts, the president responds, "We're going to see some amazing economic growth because of this new policy, so much growth that we're going to grow our way out of any short-term increases to government debt." If this extra economic growth doesn't materialize, what are some of the risks to the U.S. economy? Interest payments on the federal debt will consume a larger portion of the federal budget, potentially displacing other government priorities. Higher government debt may make future borrowing more difficult. It gives foreign creditors substantial control over U.S. economic policy. It places an unsupportable burden on future generations.
- Question 21 An increase in real per capita GDP in an economy would __________ the average standard of living and would _________ life expectancy. raise; have little effect on raise; shorten raise; increase have no effect on; increase lower; shorten Question 22 An increase in _________ would lead to an increase in long-run economic growth. consumer spending and borrowing government taxes and fees resources and technology imports and exports prices and interest rates Question 23 Which of the following are the three major categories of resources? physical capital, technology, institutions land, labor, technology institutions, human capital, land natural resources, physical capital, human capital labor, physical capital, technologyGovernment spending in the federal budget that Congress can adjust as it wishes is calledWhat policy might the federal government implement with regard to taxes and spending to help stop the economy from falling into recession?
- Ruritania's economy has been enjoying positive but slowing growth. The Ministry of Economics is considering various policy measures. Place each option in the appropriate column according to whether it will most likely lead Ruritania on a business cycle path towards continued growth or into a recession. Options: Increase government spending. Decrease government spending. Increase taxes. Decrease taxes. Increasing the federal budget deficit. Increasing the federal budget surplus. Already tried the combinations in the attached pictures and got them wrong.Suppose there is a deflationary gap in the economy and the government plans to introduce expansionary fiscal policy to move expenditure closer to full employment level of output. They will increase spending on infrastructure projects such as roads, ports, bridges, dams etc. At the same time households and firms have become pessimistic about the future and cut back spending to save more for difficult days ahead. Answer the questions below based on the government's planned policy and consumers' and firms' pessimism. What happens to the Marginal Propensity to Consume in the economy ? Choose. What happens to the Spending Multiplier? Choose. Would the effect of expansionary fiscal policy on total demand be more effective or less More effective effective? Decreases Increase Less effectiveConsider the US budget for the fiscal year that ended on Sept 30 2023. Total government spending for the year was roughly [Select] During the year, the government collected roughly [Select] This means the government experienced a [Select] in taxes.
