ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question 33
Expansionary fiscal policy occurs when the government increases __________, decreases __________, or both to stimulate the economy toward expansion.
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spending; the money supply
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taxes; spending
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the money supply; spending
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spending; taxes
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the money supply; taxes
Question 34If your marginal propensity to consume is 0.6 and you get an additional $600 in income, you would spend ______ on consumption.
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$200
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$240
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$360
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$1,000
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$1,500
Question 35If a bank has a
required reserve ratio of 25% and there are $5,300,000 in deposits, what is amount ofrequired reserves ?-
$25,000
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$280,000
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$1,325,000
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$2,275,000
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$5,005,000
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-
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- 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."arrow_forwardSuppose the tax multiplier in an economy is -8. If the government wants to lower total spending (TS) by $8000 what should they do to Taxes (T)? Group of answer choices a. they should increase taxes by $64000 b. they should decrease taxes by $64000 c. they should increase taxes by $1000 d. they should decrease taxes by $1000arrow_forwardWhich is considered expansionary fiscal policy? a)a tax increase for wealthy individuals b)an increase in national defense spending c)regulations raising emission standards on trucks d)an increase in the money supplyarrow_forward
- List the 3 major economic goals of fiscal policy. Who is responsible for fiscal policy? What issue or problem in the economy would be fixed with expansionary fiscal policy? Contractionary fiscal policy? Using an aggregate supply and demand graph, show what happens when expansionary fiscal policies are enacted such as the 2017 Tax Cuts and Jobs Act when the economy is at full employment. Label all of the curves, the vertical and horizontal axis and show the direction and impact on the economy.arrow_forwardSome Economists argue that Fiscal policy have no effects in the long run on employment and aggregate output in the economy. What are the arguments behind this belief? EXplain. If indeed the government has to apply the expansionary fiscal policy what would eventually happen to the economy. Explain step by step the process impacting the economy.arrow_forwardSuppose the economy had been producing at potential output but is now experiencing a recession. Which of the following are discretionary fiscal policies that could bring the economy closer to potential output? Check all that apply. a)Additional spending on national park facilities b)A tax hike c)A reduction in government purchases d)A tax cutarrow_forward
- Fiscal Policy: Recessionary vs Expansionary Policy Complete the following exercises. 1. Describe a policy measure the government can use to close a recessionary gap. 2. Illustrate your response to question 1 in a graph. 3. Describe a policy measure the government can use to close an inflationary gap. 4. Please Illustrate Graphically in response to question (question 3: Describe a policy measure the government can use to close an inflationary gap.)arrow_forwardThe government lowers $0.9 trillion in taxes, restoring GDP from $10 trillion to its potential level of $11.2 trillion. What is the value of the tax multiplier? A -1.33 B -0.9 C -0.75 D -1 E -1.2arrow_forwardQuestion 9arrow_forward
- Which of the following statements about the Canadian federal budget is FALSE? A. Currently, Canada has a federal budget deficit. B. The Minister of Finance presents the federal bugdet to the Canadian Parliament. C. The largest source of federal government revenues are personal income taxes. D. The largest source of federal government outlays are transfer payments to persons and other levels of government. E. Canada has not had federal budgetary surpluses in any fiscal year over the 2000 to 2020 period.arrow_forwardSuppose the government implements contractionary fiscal policy. As a result, the inflation rate will likely _____ and the real growth rate will likely _____ in the short run. Rise or fall?arrow_forwardIdentify one fiscal policy action that could counter the effects identified in part (a). Explain how this policy will affect each of the following. Output Employment The price levelarrow_forward
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