Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 11, Problem 12CQ
To determine
Keynesian view on federal budget.
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According to Keynesian economics, what impact would a balanced budget amendment to the constitution requiring the federal government to balance its budget annually have on the economy?
According to Keynesian economics, what impact would a balanced budget amendment to the constuition requiring the federal government to balance its budget annually have on the economy?
How would a Keynesian Economist use Fiscal Policy to fight a Recession? Please do not
write about Monetary Policy here, only Fiscal Policy.
Chapter 11 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Is there a limit to government spending in regards to keynesian economics? Can we print as much money to increase consumer spending and allow the aggregate to shift to the rightarrow_forwardWhat might be some Keynesian prescriptions to get the economy out of an economic slump (both fiscal and monetary)?arrow_forwardIn an economy, marginal propensity to consume (MPC) is 0.75 where Keynesian model works. Now, if government increases both its expenditure and taxes by 1000, then Income increases by 4000; Income increases by 3000; Income increases by 1000; Income do not change?arrow_forward
- Keynesian economics defends budget balance. However, according to economists, budget balance may exacerbate the effects of the business cycle. Isn't it also a Keynesian view to use discretionary policy to smoothen the business cycles? Aren't those two views contradictory?arrow_forwardIn the Keynesian model, an increase in government spending would result in what?arrow_forwardThe economist views the budget as a public policy making tool? True or falsearrow_forward
- Explain the cost of a recession from the keynesian spending model perspective.arrow_forwardIdentify similarities and differences in the way Keynes and Hayek think about information and knowledge in the economic system. Discuss how their disagreement affects the way their position with respect to policymaking.arrow_forwardWhat is supply-side or "trickle-down" economics? Why do Keynesians reject supply-side economics? Does the history of the marginal income tax structure in the U.S. support or challenge the idea of tickle down economics?arrow_forward
- If planned expenditures are below actual production, what will happen to income? Explain the process by which this happens.arrow_forwardUsing the concept in Keynesian economics, which one of the following may not be an effective fiscal policy when there is inflation? a) increasing aggregate demand b) increasing corporate taxes. c) increasing personal taxes. d) decreasing government purchases.arrow_forward
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