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 5CQ
To determine
The effects of enlarged budget deficit during economic recession.
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Economics: Private and Public Choice (MindTap Course List)
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- A recession in the United States is likely to raise the growth of real GDP in Europe. Do you agree or disagree? Why?arrow_forwardCan governments use expansionary fiscal policy or expansionary monetary to effectively fight recessions? Why or Why Not?arrow_forwardIn 2010 the Greek government had to inform the European Commission on how it would control its budget deficit and improve the performance of its economy. The government’s debt is so high that agencies assessing the creditworthiness of the government downgraded it (which would mean more interest has to be paid to raise finance). Proposals were likely to include a 10% cut in government spending. What actions can the government take to increase national income growth in Greece? If the Greek economy is in recession what would you expect to be the effect on: a) Inflation? b) Unemployment? c) Imports? Explain your answers.arrow_forward
- What caused the Great Recession of 2008 in the United States?arrow_forwardWhat were the monetary and fiscal policy responses to the Great Recession? Discuss their effectiveness and how the policy contributed to GDP growth.arrow_forwardIf a nation’s central bank, such as the US Federal reserve, believes the economy is headed toward a recession, what actions should it take?arrow_forward
- What were the causes and consequences of the Great Recession?arrow_forwardIn the context of economic recession, explain monetary and fiscal measures that should be implemented by the government and discuss the impacts of these measures on businesses.arrow_forwardWhat might deter a policymaker from trying to raise the rate of saving?arrow_forward
- What went wrong with the U.S. economy in 2008?arrow_forwardWhen an economy dips into a recession, consumers will often be relatively pessimistic about the future for an extended period time. How will this pesimism affect the speed and strength of the recovery?arrow_forwarda) Why can't the government run a budget deficit in a one- period macroeconomic model? b) Why are government transfer payments not included in (expenditure-based) GDP?arrow_forward
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