Which statement is CORRECT?A) Automatic stabilizers indicate deliberate action by policy makers.O B)Discretionary fiscal policy shows automatic adjustments without any specificeffort by policy makers.C) Discretionary fiscal policy indicates deliberate action by policy makers.Automatic stabilizers are risky tó use and sometimes can get the economyD)destabilized.

Answer: In the case of discretionary fiscal policy, the government takes deliberate action to either…

Which statement is CORRECT? O A) Automatic stabilizers indicate deliberate action by policy makers. O B) Discretionary fiscal policy shows automatic adjustments without any specific effort by policy makers. O Discretionary fiscal policy indicates deliberate action by policy makers. Automatic stabilizers are risky tó use and sometimes can get the economy D) destabilized.

Which statement is CORRECT? O A) Automatic stabilizers indicate deliberate action by policy makers. O B) Discretionary fiscal policy shows automatic adjustments without any specific effort by policy makers. O Discretionary fiscal policy indicates deliberate action by policy makers. Automatic stabilizers are risky tó use and sometimes can get the economy D) destabilized.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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#17
Imagine a 45°-line (Keynesian cross) diagram in which the upward-sloping aggregate expenditure curve intersects the 45°-line at point A. The economy is currently in macroeconomic equilibrium at output level Y.. Suppose that the price level increases. If the price level increases, the aggregate expenditures line will shift down The new equilibrium levels of GDP and expenditures will be O A. where the new AE line intersects the 45°-line. O B. unchanged. OC. anywhere on the new AE line ⒸD. where the new AE line interesects the original AE line.
What would happen to output, employment, and the price level if the government increased spending on infrastructure, ceteris paribus? O Output would decrease, employment would decrease, and the price level would decrease O Output would decrease, employment would decrease, and the price level would increase O Output would decrease, employment would increase, and the price level would increase Output would increase, employment would increase, and the price level would decrease. O Output would increase, employment would increase, and the price level would increase Question 2(Multiple Choice Worth 5 points) (03.06 MC) Assume the price level is increasing, real GDP is decreasing, and the unemployment rate is increasing. Which event would explain this macroeconomic situation? OA positive supply shock OA negative supply shock A positive demand shock OA negative demand shock O insufficient data
2. For simplicity, we normally treat aggregate tax payments (T) as determined by politics or other factors unrelated to output. However, suppose that aggregate tax payments are proportional to income. That is, T=t·Y, where tis the marginal tax rate and is between o and 1. a. How, if at all, would this change in our assumptions affect the Keynesian cross diagram? b. Would this change increase, decrease, or have no impact on the multiplier effect, or is it not possible to tell? (That is, how would the effect of a given vertical shift of the planned expenditure line compare with what it was before?)
Refer to the diagram that shows an AD/AS model for a hypothetical economy. Suppose the economy is in a short-run equilibrium at Y₁. An appropriate fiscal policy for attaining potential output (Y*) is a(n) O A. decrease in current imports. O B. increase in personal and corporate taxes. O C. decrease in current consumption. O D. increase in exports. Po B Y₁ Real GDP AD G
As the economy contracts, transfer payments O fall and tax revenues rise, causing the economy to contract by less than it would in the absence of automatic stabilizers. O fall and tax revenues fall, causing the economy to contract by more than it would in the absence of automatic stabilizers. O rise and tax revenues fall, causing the economy to contract by less than it would in the absence of automatic stabilizers. O rise and discretionary spending fall, causing the economy to contract by less than it would in the absence of automatic stabilizers. Question 11 Which of the following is considered discretionary government spending? O payments to Center for Discase Control (CDC) personnel O infrastructure maintenance spending all responses are correct. funding for the Environmental Protection Agency
1. Indicate whether each of the following government actions are Expansionary or Contractionary. Determine if the situation describes to changes in leakages or injections and whether it increases or decreases. Then indicate whether it is an automatic or discretionary stabilizer. /18 a) In middle of a recession, government provides subsidies to support exports of Canadian products. b) As the recession deepens, government expenditures on employment insurance increase ($ paid to unemployed people by the government)... c) The Government passes a new law to impose a new carbon tax d) As the economy slows, Government spends 100's of millions on roads and bridges. e) As the economy strengthens in a strong recovery, the amount of tax money from sales tax increases f) In the midst of a recession, the federal government decides to reduce income tax rates. Put a check mark in the proper boxes You will complete 3 columns for each prompt – a prompt will either effect leakages or injections. (not…
The permanent income hypothesis and the Ricardian equivalence theorem Select one: O a. are the same thing. O b. are related, but the first relates to the behavor of the whole economy, while the second relates to the behavor of a single consumer. O c. are related, but the first relates to the behavior of a sıngle consumer while the second relates to the behavior of the whole economy. O d. are completely unrelated.
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)
Economics You are told that an economy's full-employment level of real output is $800 billion while its equilibrium level is S600 billion and the AD shortfall is $400 billion. You are also told that the mpc is 0.6. If the government wants to eliminate the gap by means of an EQUAL change in Gand T (taxes), It should decrease both G and T by $400 billion. OA Oe increase both G and T by $400 billion. Oc decrease both G and T by $200 billion. OD increase both G and T by $200 billion.
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
Choose correct option. Correctly now