Using the AE model, show the economy in equilibrium. Then, show the impact of an increase in government spending to reduce the unemployment rate. Would the above be considered expansionary or contractionary fiscal policy? Assume the change in government spending in above is $25 billion dollars and MPC = .95. What will be the change in GDP?

Fiscal Policy A closer Look at Fiscal Policy 4. In the 1960's the U.S economy faced inflationary pressures. Assume that in 1968 there was an AD Excess of $190 billion. Assume the MPC-95 (All the following problems require mathematical calculations.) a. What change in government expenditures would you have recommended?

Suppose the economy begins at full employment. Label this starting point as point "1." Then, suppose that a long strike by coal miners reduces the coal supply and increases the price of coal. Show the effects on your graph and label the new equilibrium point "2." Lastly, suppose our government wants the economy to return to full-employment as quickly as possible. Should the government intervene? If so, show the impact of successful fiscal policy on your graph. Label this new equilibrium point "3."

To enact Contractionary Fiscal Policy, the federal government must be running a budget ___________.

Which of the following is an appropriate fiscal policy response to a negative GDP gap?   a. raise income tax rates   b. increase government spending   c. raise real interest rates   d. lower real interest rates

The marginal propensity to expend is 0.5 and there is a recessionary gap of $200. What fiscal policy would you recommend? (Assume mpe = mpc) 0000 Expansionary fiscal policy; increase government expenditures by $100, or cut taxes by $200. Contractionary fiscal policy; decrease government expenditures by $200, or cut taxes by $100. Contractionary fiscal policy; decrease government expenditures by $100, or cut taxes by $200. Expansionary fiscal policy; increase government expenditures by $200, or cut taxes by $100.

How relevant is the multiplier concept to the implementation of expansionary andcontractionary fiscal policies?

How relevant is the multiplier concept to the implementation of expansionary and contractionary fiscal policies?

President Biden is proposing an increase in the corporate income tax rate from 21% to 28%. Although the corporate tax rate will be higher than it is currently, it is still lower than the corporate tax rate of 35% that had been in place since President Clinton. How will this tax increase affect aggregate expenditures, equilibrium GDP and employment? Part of the reason for this proposal is to offset the increased spending from the last three stimulus packages/checks which increased Federal government's debt.  Do you agree with the proposed increase in corporate tax rates? Why or why not? What are some of the costs and benefits of the proposed tax changes? Is this the right time to increase taxes? Why or why not?

What are the primary goals of expansionary and contractionary fiscal policies and their effects on unemployment rates, inflation rates, interest rates, private investment, and GDP?