QUESTION 2 1. The situation in which the average of all prices of products is rising is called inflation. True False 2. The higher the price of a good or service, the greater the amount a producer is willing to supply. True False 3. When Congress passes a law to raise individual tax rates, it is creating fiscal policy. True/ False

QUESTION 2 1. The situation in which the average of all prices of products is rising is called inflation. True False 2. The higher the price of a good or service, the greater the amount a producer is willing to supply. True False 3. When Congress passes a law to raise individual tax rates, it is creating fiscal policy. True/ False

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Introduction To Macroeconomics

Section: Chapter Questions

Problem 4.6P

See similar textbooks

Similar questions

An increase in taxes would be a good policy A. when there is stagflation, as this policy would push aggregate supply to the right. B. during a recession, as this policy would stimulate aggregate demand. C. during a recession, as this policy would reduce aggregate supply. D. when there is inflation, as this policy would push aggregate demand to the left. E. when there is inflation, as this policy would push aggregate demand to the right. QUESTION 20 An increase in the price level will A. shift the aggregate demand curve to the left. B. shift the aggregate supply curve to the left. C. move the economy down along a stationary aggregate supply curve. D. shift the aggregate demand curve to the right. E. move the economy up along a stationary aggregate demand curve.
(b) Assume that the household in an economy spend 75% of their extra income. Calculate the change of aggregate demand if government increase their spending by $150,000. (c) If prices keep rising, a nightmare scenario for the US economy is a real possibility New York (CNN Business) There's no denying it: Inflation is here. Consumer prices surged 7% over the past year. Housing prices have continued to soar, too. But the question on the minds of many economists and Wall Street strategists is whether something even worse could be in the cards: prices rising as the economy slows. Source: CNN Business, 12" January 2022. Examine the cause of stagflation, and how it affects the output and price level. (d) Based on part (c), what will happen to the output and price level if the US policymakers accommodate the shift in aggregate supply? State only one fiscal policy tool that the policymakers may use.
An appropriate fiscal policy response to a recession would be to decrease which of these? Question 9 options: A.) the money supply B.) nominal interest rates C.) government spending D.) the personal income tax rate
f Congress and the president decide an expansionary fiscal policy is necessary, then they should target higher interest rates by decreasing the money supply. enact policies that increase government spending and decrease taxes. Oenact policies that decrease government spending and increase taxes. O target lower interest rates by increasing the money supply. 2001-20 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.
In the United States, the various state governments almost all have laws that require them to balance their budgets, every single year. Such a law would require them to ___during a ____ , resulting in a ____ recession. recession ,boom ,bigger, smaller, decrease taxes, increase taxes
18. What happens when the government temporarily runs a deficit by spending more on public stimulus without raising taxes? A. The aggregate demand curve moves to the right. B. The aggregate supply curve will shift to the right but only in the short run. C. The aggregate demand curve moves to the left. D. The aggregate supply curve will shift to the right but only in the long run.
Expansionary fiscal policy will ________GDP and ________ inflation. a. raise,lower b. lower,lower c. lower,raise d. raise,raise
Country D experiences a recession due to a decrease in consumer confidence. There are two economists, Andrew and Betty. Betty suggests the government to do nothing. Andrew suggests the government to implement fiscal policies to revive the economy as soon as possible. If the government adopts Betty’s policy, draw an AD-AS graph to show what happens to the economy in short run and then long run after the decrease in consumer confidence. Suppose the government adopts Andrew’s policy. (i) Will the government increase or decrease spending? (ii) The government cuts the income tax rate. After cutting the income tax rate, the total income tax revenue collected increases. Explain why. (iii) Will Andrew’s policy be more effective if MPC is smaller? Give one advantage of Betty’s policy over Andrew’s policy.
An economy is in long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. What kind of gap - inflationary or recessionary - will the economy face after the shock, and what type of fiscal policies would help move the economy back to potential output? How would your recommended fiscal policy shift the aggregate demandcurve? (Note: you do not need to draw anything).(a) A stock market boom increases the value of stocks held by households.(b) Firms come to believe that a recession in the near future is likely.(c) Anticipating the possibility of war, the government increases its purchases of military equipment.(d) The quantity of money in the economy declines and interest rates increase.
29. Increasing the public debt can be associated witha. an expansionary fiscal policy.b. an expansionary monetary policy.c. a contractionary fiscal policy.d. a contractionary monetary policy. 30. Increasing the debt ceilinga. is tied to the increase in the CPI.b. must be approved by Congress.c. must be approved by the Federal Reserve Bank.d. would have been opposed by John Maynard Keynes since his most important policy recommendation was to balance the budget.e. both b) and d) are correct.
10 Within the Keynesian system explain the following: (a) the relationship between the effectiveness of monetary policy and the interest elasticity of investment. Will monetary policy be more or less effective the higher the interest elasticity of investment demand? Now explain the relationship between the effectiveness of fiscal policy and the interest elasticity of investment demand. (b) the relationship between the effectiveness of monetary policy and the interest elasticity of money demand. Will monetary policy be more or less effective the higher the interest elasticity of money demand? Now explain the relationship between fiscal policy and the interest elasticity of money demand.
1. Suppose the economy has fallen into a recession (output level ?0), and the federal government wants to return the economy to its original level of output (?). Respond to each of the following questions using appropriate diagrams and explanations.(a) If policy makers can only use fiscal tools, what should they do?(b) If policy makers can only use monetary tools, what should they do? (c) What should they do if they want to return output to its original level but keep investment from changing?