Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 32, Problem 4MCQ
To determine
Concept of automatic fiscal policy.
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Students have asked these similar questions
9.
The lag associated with fiscal policy can:
magnify economic fluctuations.
stimulate output beyond full employment.
depress output below full employment.
all of the above.
Question 16
If the economy is in stagflation, what would eventually happen as a result if no fiscal policy is used and the
economy adjusts back to full employment?
Prices would increase and unemployment would increase
O Prices would increase and unemployment would fall
Prices would fall and unemployment would increase
Prices would fall and unemployment would fall
43
_____ are elements of fiscal policy that automatically change when income changes.
a.
Budget deficits
b.
Automatic stabilizers
c.
Supply-side shocks
d.
Exchange rates
e.
Statistical discrepancies
Chapter 32 Solutions
Foundations of Economics (8th Edition)
Ch. 32 - Prob. 1SPPACh. 32 - Prob. 2SPPACh. 32 - Prob. 3SPPACh. 32 - Prob. 4SPPACh. 32 - Prob. 5SPPACh. 32 - Prob. 6SPPACh. 32 - Prob. 7SPPACh. 32 - Prob. 8SPPACh. 32 - Prob. 9SPPACh. 32 - Prob. 10SPPA
Ch. 32 - Prob. 1IAPACh. 32 - Prob. 2IAPACh. 32 - Prob. 3IAPACh. 32 - Prob. 4IAPACh. 32 - Prob. 5IAPACh. 32 - Prob. 6IAPACh. 32 - Prob. 7IAPACh. 32 - Prob. 8IAPACh. 32 - Prob. 9IAPACh. 32 - Prob. 10IAPACh. 32 - Prob. 11IAPACh. 32 - Prob. 1MCQCh. 32 - Prob. 2MCQCh. 32 - Prob. 3MCQCh. 32 - Prob. 4MCQCh. 32 - Prob. 5MCQCh. 32 - Prob. 6MCQCh. 32 - Prob. 7MCQCh. 32 - Prob. 8MCQ
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- What is the main reason for employing expansionary fiscal policy during a recession?arrow_forwardWhat is the main reason for employing contractionary fiscal policy in a time of strong economic growth?arrow_forward|An economy is in a below full-employment equilibrium. What is the effect on aggregate demand and real GDP, and the price level of fiscal stimulus that returns the economy to full employment? What is an example of fiscal stimulus that returns the economy to full employment from a below full-employment equilibrium? Fiscal stimulus that returns the economy to full employment _______ aggregate demand and real GDP, and the price level _______. A. increases; falls B. decreases; falls C. does not change; does not change D. increases; rises The fiscal stimulus that returns the economy to full employment from a below full-employment equilibrium _______. A. could be an increase in government expenditure and an equal increase in taxes B. could be a decrease in government expenditure and an equal decrease in taxes C. must be a decrease in taxes D. must be an increase in government expenditurearrow_forward
- Fiscal Policy) Was fiscal policy effective when the U.S. economy was experiencing stagflation during the 1970s? Why or why not?arrow_forward2. The U.S. economy is in recession and has a large recessionary gap. Describe what automatic fiscal policy might occur. Describe a fiscal stimulus that could be used that would not increase the budget deficit. A. What are the levels of employment and potential GDP in OilPatch, what is the real wage rate paid by employers, and what is the after-tax real wage rate received by workers?arrow_forward19. What is Fiscal Policy? Discuss types of Fiscal policies?arrow_forward
- Discuss Expansionary Fiscal Policy. Who is responsible for implementing fiscal policy? What may be adjusted to implement the policy?According to studies, fiscal policy can be slow to react to economic situations. Identify and discuss one reason why this may occur.arrow_forwardFiscal stance refers to: Select one: A. A government that takes a tough stance when it comes to running the country’s finances B. A government that is running a budget deficit C. A government that is running a budget surplus D. Whether a government is pursuing an expansionary or contractionary fiscal policyarrow_forwardIn a recession, needs-tested spending ________ and induced taxes ________. increases; increase decreases; increase increases; decrease decreases; decrease increase; do not change Discretionary fiscal policy is defined as fiscal policy initiated by an act of Congress. left to the discretion of military authorities. with multiplier effects. initiated by a Presidential proclamation. triggered by the state of the economy. If government expenditure on goods and services increase by $100 billion, then aggregate demand increases by $100 billion. decreases by more than $100 billion. increases by more than $100 billion. increases by less than $100 billion. remains unchanged. The magnitude of the tax multiplier is ________ the magnitude of the government expenditure multiplier. smaller than greater than exactly one half the inverse of equal to Suppose the economy is in an equilibrium in which real GDP is less than potential GDP. To increase…arrow_forward
- How will a contractionary fiscal policy affect a budget deficit? A.) Debts will decrease B.) No impact C.) Deficit will increase D.) Deficit will decreasearrow_forwardOnly typed answer and don't use chat gpt The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the economy. A.) expansionary fiscal policy; an increase in corporate taxes B.) contractionary fiscal policy; a reduction in taxes C.) contractionary fiscal policy; an increase in taxes D.) expansionary fiscal policy; an increase in government spendingarrow_forwardwhen large governemnet budget deficits are financed by _____ hyperinflation occursarrow_forward
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