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6.
A reduction in government expenditure or an increase in taxes is defined as:
- expansionary
monetary policy. - contractionary fiscal policy.
- expansionary fiscal policy.
- contractionary monetary policy.
Step by step
Solved in 4 steps
- Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.37. What happens when the government temporarily runs a deficit by spending more on public stimulus without raising taxes? The aggregate supply curve will shift to the right but only in the short run. The aggregate demand curve moves to the right. The aggregate supply curve will shift to the right but only in the long run. The aggregate demand curve moves to the left.07. What factors make an expansionary "stimulus" fiscal policy effective? One answer a) A government budget deficit associated with fiscal stimulus should should borrow money from those who spend less and save more, to those who spend more and save less. b) A permanent decrease in taxes is more effective in stimulating spending than a temporary one c) An increase in government purchases of goods and services should be temporary and should not permanently displace private spending d) The most expansionary way of financing the budget deficit associated with a fiscal stimulus policy is by the central bank expanding the quantity of money in circulation. e) Infrastructure investment belongs with long-term growth policy, but invariably makes a poor element in stimulus policy because such investment normally take a long time to implement. f) All the above
- 3. Explain how expansionary fiscal policy can close a recessionary gap using an appropriate diagram. Note: Use the following terms. They are: Long-run aggregate supply curve (LRAS). short-run aggregate supply curve (SRAS), Aggregate demand (AD). Real GDP price level. potential GDP, etc.4 HOMEY set of any of yes to $30 -0- -o- My ly Suppose that for every increase in the sterest rate ens peresage the end of westmant spending decies by 565 bon Based on the anes the level of investments to b Suppose that for every increase in the interest rate of one percentage point, the level of investment spending declines by $0.5 billion. Based on the changes made to the money market in the previous scenario, the new interest rate causes the level of investment spending to by Taking the multiplier effect into account, the change in investment spending will cause the quantity of output demanded to known as the by at every price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is effect. Use the purple line (diamond symbol) on the graph at the beginning of this problem to show the aggregate demand curve (ADS) after accounting for the impact of the increase in government purchases on the interest rate and the level of…answer quikly read the passeg and answer this question (a) (i) Define “expansionary fiscal policy” using above Malaysia budget 2022article. (ii) Explain the application of “expansionary fiscal policy” using aboveMalaysia budget 2022 article.
- 8. Using policy to stabilize the economy The government possesses the tools necessary to influence the output level in the short run through use of monetary and fiscal policy. However, there is some debate regarding whether the government should attempt to stabilize the economy. Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. The current tax system acts as an automatic stabilizer. Businesses make investment plans many months in advance. Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president. Which of the following policies are examples of automatic stabilizers? Check all that apply. Personal income taxes The discount rate The federal funds rate4. Deficits in new classical economics Felix lives in the fictional country of Lindelof, which raises government revenue by taxing everyone the same amount. The government of Lindelof has just implemented a tax cut that reduces annual taxes by $3,500 per person. However, government spending has not changed, nor is it likely change in the future. The tax cut has raised Felix's income by $3,500. If Felix acts according to the prediction of new classical economics (and doesn't plan to leave Lindelof), his consumption is likely to increase by Suppose that instead of cutting taxes while keeping its spending the same, the government did the opposite: it increased its spending by $3,500 per person while keeping taxes the same. If everyone in Lindelof acted like Felix, the likely increase in aggregate demand would be per person.7. The national debt a. Is paid off each fiscal year when the debt is refinanced. b. Will never be paid off in any given year, but it will be entirely paid off when it is refinanced over a number of years. Will be paid off when the budget is finally balanced. Equals the dollar amount of outstanding U.S. Treasury bonds. c d
- 4.1 Discuss the meaning of expansionary fiscal policyAssume that the economy experiences very high increasing energy prices. 1. Explain about what counter cyclical fiscal policy should be used. (Use the macroeconomic approach and include diagram)4. Primary fiscal surplus refers to: a. private savings b. total savings c. public savings d. trade balance
