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 12, Problem 13CQ
To determine
Limitations of fiscal policy.
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Please discuss the need and use of fiscal policy in countries such as the UK during the crisis. Will the fiscal policy remain the key policy instrument in these sorts of countries in the near future? In what way is monetary policy constrained and might that constraint be relaxed? In the case of fiscal policy, how should it be altered to support economic recovery?
If stability of the economy is the primary objective of Fiscal Policy, then an Annually Balanced Budget (Government Expenditures = Tax Revenues) is the best policy approach. True or False?
Evaluate the effectiveness of fiscal policy as a tool to reduce unemployment.
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Economics: Private and Public Choice (MindTap Course List)
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- In which of the following cases does the size of the government’s debt and deficit indicate potential problems for the economy? Explain your answer. a) The government’s debt is relatively low, but the government is running a large budget deficit as it builds a high-speed rail system to connect the major cities of the nation. b) The government’s debt is relatively high due to a recently ended deficit-financed war, but the government is now running only a small budget deficit. c) The government’s debt is relatively low, but the government is running a budget deficit to finance the interest payments on the debt. 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.arrow_forwardThis course is designed to provide an understanding of market economies and the fluctuations they are subject to. With this in mind, please answer the questions that follow. a) Assume the economy is in a recession. Discuss how the government could implement fiscal policy to deal with the recession and the steps by which fiscal policy moves the economy out of the recession (Explain fully). b) Explain how expansionary fiscal policy in the U.S. would affect the economies of other countries.arrow_forwardAnswer the following questions: As you know, the US government has been running budget deficits for several years now. In your opinion, and based on economic reasoning, what will happen to the US economy if the US Federal Government continues to run annual budget deficits for the next decade. Will the economy survive that? Will the economy grow? Will it grow as fast as it could? Will the deficits cause the economy to grow faster? Will it grow at all? These are some of the questions you might address in your primary post.arrow_forward
- Based on the Krugman text and your reader articles, what position do you take on the current fiscal policy debate of stimulus vs austerity? Be sure to include the current tight job markets, moderate-high inflation, and high-debt conditions in justifying your answer.arrow_forwardSuppose we wanted to use fiscal policy (a change in taxes OR a change in government spending) in order to stimulate the economy. If we were concerned about the impact on the government’s budget deficit, which policy option should we choose? Explain your reasoning.arrow_forwardIf the government tries to reduce inflation when the production level in the country is higher than potential Gross Domestic Product, then one of the following answers which depicts a fiscal policy measure will be able to achieve that goal. Which one? Group of answer choices decrease in government spending decrease corporate tax rates decrease the interest rate increase transfer paymentsarrow_forward
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