01. Which ff the following reasons why fine-tuning the economy is not likely to be successful, is not really a problem for fiscal policy? (a) Recognition lag (b) Policy lag O(() Implementation lag (d) Impact lag (e) Both (a) and (b)

Suppose the economy begins at full employment. Label this starting point as point "1." Then, suppose that an upcoming political election causes anxiety among consumers and consumption falls. Show the effects on your graph and label the new equilibrium point "2." Lastly, our government wants the economy to return to full-employment as quickly as possible. Should it intervene? If so, show the impact of successful fiscal policy on your graph. Label this new equilibrium point "3."

Crowding out effect refers to government fiscal policy tools affecting _____? A. private spending B. international trade C. the government budget deficit D. the money supply

To combat a recession, the Indian government enacts expansionary fiscal policy, which increases government spending by 2 trillion rupees. In response, GDP increases by 6 trillion rupees. a. What is the multiplier? b. Illustrate the impact of this expansionary fiscal policy on the Indian economy using an AD-AS graph. c. How will the price level change?

A. Calculate the levels of consumption and savings that occurs when the economy is in equilibrium. B. Computer the government budget deficit in this economy. C. If government spending in banana land increases by $1000 what is the amount of the increase in equilibrium output? D. If taxes in banana land decrease by $1000 what is the new equilibrium output in this economy? E. To keep the government budget balanced, of both government spending and taxes in banana land increase by $1000 what is the change in equilibrium income level?

5. Demand side fiscal policy is also known as Keynesian Economic Theory * O True O False

6. Outline the supply-side view of fiscal policy. How does this view differ from the various demand-side theories? Would a supply-side economist be likely to favor a $1,000 rebate to all taxpayers or an equivalent reduction in marginal tax rates? Why?

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Using the aggregate expenditures model, answer the questions below to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap.

Which of the following is not a predicted outcome of implementing automatic fiscal policy? О а. Reduces the size of the multiplier O b. Helps prevent inflation due to inflationary gaps O C. Moderates the business cycle O d. Decreases the deficit O e. Reduces the effects of economic shocks