What would have a larger effect on aggregate demand: $150 billion of tax cuts or $150 billion of government expenditure? 1 try left Government expenditure would have a than the tax cuts because effect on aggregate demand A. smaller; tax cuts increase aggregate demand and government expenditure decreases aggregate supply OB. smaller; tax cuts increase aggregate demand and government expenditure decreases aggregate demand Oc. larger; the tax cuts decrease aggregate expenditure while government expenditure increase aggregate demand D. larger; all government expenditure is spent while some of the tax cut is saved 3

What would have a larger effect on aggregate demand: $150 billion of tax cuts or $150 billion of government expenditure? 1 try left Government expenditure would have a than the tax cuts because effect on aggregate demand A. smaller; tax cuts increase aggregate demand and government expenditure decreases aggregate supply OB. smaller; tax cuts increase aggregate demand and government expenditure decreases aggregate demand Oc. larger; the tax cuts decrease aggregate expenditure while government expenditure increase aggregate demand D. larger; all government expenditure is spent while some of the tax cut is saved 3

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 3P

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Similar questions

Under what general macroeconomic circumstances might a government use expansionary fiscal policy? When might it use contractionary fiscal policy?
What are some of the ways fiscal policy might encourage economic growth?
Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending by the University of Illinois is not fiscal policy? Why is a cut in the payroll tax fiscal policy whereas a cut in a state income tax is not fiscal policy?
What would happen if expansionary fiscal policy was implemented in a recession but, due to lag, did not actually take effect until after the economy was back to potential GDP?
Figure 8-23. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 6 on4m21 3 Tax Revenue B Tax Size Refer to Figure 8-23. If the economy is at point A on the curve, then a small increase in the tax rate will O increase the deadweight loss of the tax and increase tax revenue. O increase the deadweight loss of the tax and decrease tax revenue. decrease the deadweight loss of the tax and increase tax revenue. O decrease the deadweight loss of the tax and decrease tax revenue.
Which of the following is NOT a tool of fiscal policy. O taxes O government spending Onterest rates none of the above Question 2 Assume the economy is in a deep recession. The appropriate fiscal policy response would be to: raise taxes and raise govemment expenditures cut taxes and cut govermment expenditures raise taxes and cut government expenditures O cut taxes and increase government expenditures D Question 3 Crowding out refers to the fact that: Tax cuts will cause inflation O Tax cuts may result in higher interest rates which will "crowd out" business investment spending O increased government spending will crowd out spending on imports none of the above
When government spending increases by $1, planned expenditures increase by $1 O A. times the spending multiplier and the equilibrium level of income will increase by $1. O B. and the equilibrium level of income will increase by $1. O C. and the equilibrium level of income will increase by $1 times the spending multiplier. O D. and the equilibrium level of income will increase by less than $1. When taxes are cut by $1, planned expenditures O A. decrease by $1 and the equilibrium level of income will decrease by $1 times the tax multiplier. O B. increase by less than $1 and the equilibrium level of income will increase by $1 times the tax multiplier. OC. increase by $1 and the equilibrium level of income will increase by S1 times the tax multiplier. O D. increase by $1 and the equilibrium level of income will increase by $1 times the spending multiplier. Click to select your answer! V560
15. If consumers in a country spend 3/4 of their disposable income. If their governmentincreases its spending by 75 trillion and in order to maintain a balanced budgetsimultaneously increases taxes by 75 trillion. Calculate the effect of the 75 trillion change ingovernment spending and 75 trillion change in taxes on the country’s aggregate demand.
Which of the following would be classed as an expansionary fiscal policy? O A. An increase in the money supply Ов. A reduction in the number of goods exempted from VAT An increase in government taxation OD. An increase in government expenditure
S Suppose a tax is such that an individual with an income of $10,000 pays $1,500 of tax, a person with an income of $20,000 pays $2,500 of tax, a person with an income of $30,000 pays $3,000 of tax, and so forth. Instructions: Enter your answers rounded to 1 decimal place. a. What is each person's average tax rate? Income $ 10,000 20,000 30,000 Tax Paid. Average Tax Rate 15 % Regressive $1,500 2,500 3,000 8 b. Is this tax regressive, proportional, or progressive?
16. If consumers in a country spend 4/5 of their disposable income. If their governmentdecreases its spending by 55 trillion and in order to maintain a balanced budgetsimultaneously decreases taxes by 55 trillion. Calculate the effect of the 55 trillion change ingovernment spending and 55 trillion change in taxes on the country’s aggregate demand.
A Moving to another question will save this response. Question 23 Fiscal policy can move us to equilibrium at Full Employment by O a. these are all possible fiscal policies to bring us to full employment. O b. bailing out troubled industries with special subsidies like the "paycheck protection" during the pandemic. O c. making changes in G, net government spending. O d. changing tax rates people have to pay. A Moving to another question will save this response. tab 1 Q ABA 2 W E R T