in the dynamic model of AD-AS in the figure to the right, if the economy is at point A in year 1 and is expected to go to point 8 in year 2, Congress and the president would most likely pursue OA expansionary fiscal policy. OB expansionary automatic stabilizers OC. contractionary fiscal policy OD. contractionary monetary policy OE expansionary monetary policy

in the dynamic model of AD-AS in the figure to the right, if the economy is at point A in year 1 and is expected to go to point 8 in year 2, Congress and the president would most likely pursue OA expansionary fiscal policy. OB expansionary automatic stabilizers OC. contractionary fiscal policy OD. contractionary monetary policy OE expansionary monetary policy

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please do questions D-F. Thanks
How much government spending needs to be increased to maintain full employment in the economy If the economy was facing recessionary gap of $900 billions? Assume MPC is .9. How much tax cut should government give if they wanted to eliminate this recessionary gap through tax cut?
If the equilibrium real GDP were higher than potential GDP, then a contractionary fiscal policy would cause the inflation rate to be ________ and real GDP to be ________. a. higher; higher b. higher; lower c. lower; higher d. lower; lower
The Keynesian multiplier indicates that fiscal policy O A. Makes businesses worse off OB. Provides a powerful stimulus to the economy OC. Only increases national debt OD. In Keynesian economics is wrong
indentified Qe but not the rest
If the AD excess is $300 billion and the MPC is 0.75. Instructions: Round your responses to one decimal place. a. how much fiscal restraint is desired? billion b. by how much do income taxes have to be increased to get that restraint? billion c. alternatively, how much should government reduce its spending to achieve the target? billion
If Congress wanted to help the economy out of a recession, they would be most likely to: check all that apply increase interest rates reduce government spending O increase transfer payments O decrease taxes
An economy is currently in a short-run equilibrium at point a. Which fiscal policy action would MOST likely bring the economy back to full employment output? LRAS SRAS Aggregate Price Level (P) Aggregate Output (Q) increase in taxes decrease in interest rates increase in government spending O increase in transfer payments ADO 自 ˊˋ
Given an upward-sloping short-run AS curve, expansionary fiscal policy (ceteris paribus) will result in: (i) Higher prices in the short run (ii) Higher output in the short run (iii) Higher prices in the long run (iv) Higher output in the long run O a. Only (i) and (ii) O b. Only (iii) and (iv) O c. Only (ii) and (iii) O d. Only (i) and (iv)
According to Keynes, if the economy is in a liquidity trap, the appropriate economic policy is O fiscal contraction O fiscal expansion O monetary expansion
b) What does the IS-LM-PC model imply about the MR effects of fiscal expansion? When is a fiscal expansion needed?
H5