MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter P4, Problem 11KC
To determine
The fiscal policy required to handle the $900 rightward shift in the demand.
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Question:
"In a hypothetical economy, the government
implements a fiscal stimulus package by
increasing public spending on infrastructure
projects. At the same time, there is a
significant rise in consumer savings rates.
Discuss the potential short-term and long-
term impacts of these simultaneous events
on the economy's aggregate demand,
interest rates, and inflation. Consider how
these changes might affect the
effectiveness of the fiscal stimulus in
achieving its intended economic objectives."
Changing Budget Priorities) What spending category claimed the largest share of federal outlays during the 1960s? How about during the most recent decade?
Question 18
A possible budget reform is
a quadrennial budget
O breaking down the budget into increasingly small budget lines
O appointing agency heads with different priorities than those of elected representatives
O a biennial budget
eliminating the operating budget
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- Question: Which of the following fiscal policy tools involves the government spending more money than it collects in revenue in order to stimulate economic activity during a recession? a) Expansionary fiscal policy b) Contractionary fiscal policy c) Neutral fiscal policy d) Austerity fiscal policyarrow_forwardQuestion: Expansionary fiscal policy is characterized by: A) Increased government spending and/or lower taxes B) Decreased government spending and/or higher taxes C) Stable government spending and constant tax rates D) Unchanged government spending but reduced tax ratesarrow_forwardQuestion 15 Congress' Economic Council recommends avoiding budget deficits to avoid crowding out private investment. The council appears to follow a. the supply side approach to fiscal policy. b. the neoclassical approach to fiscal policy. c. the Keynesian approach to fiscal policy. d. conservative principles to avoid debt.arrow_forward
- 23)Which of the following is classified as Fiscal Policy? Select one: a. The federal government passes tax cuts to encourage firms to reduce air pollution. b. College students are allowed to deduct tuition costs from their federal income taxes to encourage them to finish their college education. c. The state of Nevada builds a new tollway in an attempt to expand employment in their state d. President Obama enacted the “cash for clunkers” program in the 2008 Recession to increase spending in the economyarrow_forward10) Fiscal policy is defined as changes in federal ________ and ________ to achieve macroeconomic objectives such as price stability, high rates of economic growth, and high employment. A) taxes; interest rates B) taxes; expenditures C) interest rates; money supply D) taxes; money supplyarrow_forwardTopic: Fiscal Policy 1. A government collects $0.35 on every new dollar of income. Of the remaining $0.65 of disposable income, 20% is spent on imports, and 10% of the disposable income is saved. a. What is the marginal propensity to withdraw?b. How much of each new dollar of income is spent on domestic consumption?c. What is the spending multiplier in this economy?arrow_forward
- Government Spending, Taxes, and Fiscal Policy-End of Chapter Problem The president has just signed a new budget that drastically cuts taxes without decreasing government spending. When asked how he plans to address the dramatic increase in deficits that will occur due to the tax cuts, the president responds, "We're going to see some amazing economic growth because of this new policy, so much growth that we're going to grow our way out of any short-term increases to government debt." If this extra economic growth doesn't materialize, what are some of the risks to the U.S. economy? Interest payments on the federal debt will consume a larger portion of the federal budget, potentially displacing other government priorities. Higher government debt may make future borrowing more difficult. It gives foreign creditors substantial control over U.S. economic policy. It places an unsupportable burden on future generations.arrow_forwardQuestion 31 What is the relationship between a budget deficit and the national debt? A budget deficit adds to the size of the national debt They are the same when talking about the government The national debt makes a budget deficit more likely There is no connection between themarrow_forwardurgent Question 1 [The Singapore Government has taken various fiscal policy measures to manage the economic impacts of the COVID-19 pandemic and support the economy through the pandemic-induced recession.] (a) [We learnt in class that fiscal policy measures mainly work through the Aggregate Demand side of the economy in the short run. Discuss two macroeconomic effects that affect the size and the direction of the shift in Aggregate Demand (50 words total). Provide a diagram to illustrate these effects. ] (b) Suppose that a country’s household saving rate (savings as % of GDP) increased from 54% in 2019 to 55% in 2020. Explain whether this would strengthen or weaken the size of the economy’s fiscal policy multiplier or leave it unchanged, and the reasons why? (50 words total) Next, use these figures presented in (b) to calculate the value of multiplier for 2020. Present your calculation formula and all of your working. Write a clear sentence explaining how to interpret the final…arrow_forward
- Question 10 Fiscal policy involves the manipulation of O federal government spending and tax revenues wages and prices the supply of money O U.S. interest ratesarrow_forwardCOURSE: MACROECONOMICS - FISCAL BALANCE The government of country X, faced with a fiscal deficit, proposes an increase in public spending (G) but which further increases the country's public debt. To justify this action the president argues that they are seeking to boost the economy which will increase the country's GDP allowing to collect significantly more money than initially spent, finally improving the situation of the fiscal coffers. Is this statement correct? Does the government have knowledge of economics?arrow_forward
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