Under what circumstances is the balance-budget philosophy pro-cyclical? Multiple Choice O O O A balance budget will always be pro-cyclical. If the economy faces an inflationary gap and a budget deficit. If the economy faces a recessionary gap and a budget deficit. If the economy faces a recessionary gap and budget surplus.

Under what circumstances is the balance-budget philosophy pro-cyclical? Multiple Choice O O O A balance budget will always be pro-cyclical. If the economy faces an inflationary gap and a budget deficit. If the economy faces a recessionary gap and a budget deficit. If the economy faces a recessionary gap and budget surplus.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 4TY

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Identify each scenario as an example of expansionary fiscal policy, contractionary fiscal policy, or not an example of fiscal policy. a. An increase in the money supply is b. A decrease in taxes is fiscal policy. not an example of fiscal policy. a contractionary an expansionary d. An increase in tax rates is c. A decrease in the unemployment rate is fiscal policy. fiscal policy. f. A decrease in the money supply is e. A decrease in government spending is fiscal policy. fiscal policy. h. An increase in corporate bonds purchased is g. A decrease in transfer payments is fiscal policy. fiscal policy. i. An increase in government spending is fiscal policy.
Our macroeconomic model suggests that after a decline in aggregate demand like that of 2007, the economy will self correct and return to a position where the GDP gap is zero. If this is correct, why should the government ever intervene with fiscal policy? a. It take many years for the GDP gap to close on its own. b. This is part of the government's "mission statement" as given in the Constitution. c. Fiscal policy is profitable for banks. d. People do not trust the theory behind the model.
An economy is currently in a recession. Assume the government budget is balanced. In the absence of any discretionary policy action, will the government budget move into surplus, deficit, or remain in balance? Explain. (e) On your graph in part (a), show how the economy will adjust in the long run in the absence of any discretionary policy action. (f) Now assume instead the government increases spending without changing taxes to close the recessionary gap. What effect will this policy have on the national debt? (g) Draw a correctly labeled graph of the loanable funds market and show the effect of the change in the national debt on the equilibrium real interest rate. (h) Based on the change in the equilibrium real interest rate identified in part (g), what will happen to economic growth in the country in the long run? E
If taxes are lowered, we can expect supply-side economists to support the decision to do so because a. government revenues will increase in the long run. b. government spending will decrease in the long run. c. the government will spend more in the short run. d. economic growth cannot occur without it.
Which of the following is an example of fiscal policy? O a Controlling money supply Ob More than one of the choices is an example for fiscal policy. C. Changing reserve requirements. Consumer spending O . Tax increase. Of. Changing the prime rate
i will 5 upvotes fast If real GDP is less than Y2, then the budget will be: a. In a deficit. b. In a surplus. c. At equilibrium. d. Balanced.
Which of the following fiscal policy actions would be appropriate if the economy is experiencing an recessionary gap? OA. a decrease in government spending B. a decrease in the money supply C. an increase in interest rates D. a decrease in taxes
Which of the following would most likely occur if the federal government decreased its spending and reduced the size of the budget deficit during a period of full employment? a. The rate of inflation would decline. b. Interest rates would fall. c. The rate of inflation would rise. d. The government spending multiplier would double. give me correct and incorrect answer explanation and Dont use chatGPT otherwise i give multiple downvote
Suppose the economy is in recession. Policymakers estimate that aggregate demand is$100 billion short of the amount necessary to generate the long run natural rate of output.That is, if aggregate demand were shifted to the right by $100 billion, the economy wouldbe in long run equilibrium.a. Explain the impact on the economy if the government chooses to use fiscal policy tostabilize the economy and the marginal propensity to consume (MPC) is given as0.75 with no crowding out.
Which fiscal policy expects the economy to self-adjust? O balanced budget O counter-cyclical O business cycle O cyclically balanced ante changes to this answer
Rea Which of the following is true according to mainstream economics? O Ifa balanced budget amendment to the Constitution were ratified, we should expect the Federal Reserve and Monetary Policy to be less important OIf a balanced budget amendment to the Constitution were ratified, we should expect Fiscal Policy to become more effective three of the answers listed are correčt O Ifa balanced budget amendment to the Constitution were ratified, we should expect worse recessions If a balanced budget amendment to the Constitution were ratified, we should expect milder recessions 05:24 troduction A ENG 8°C O 23-12-2021 P Type here to search SUS prt sc f11 f12 pause break delete insert f9 f10 f8 ロ/京 f3 f4 f5 f6 f7 esc sysrq & backspace 2 3 4 5 6 7 { } Q E Y U P. 86 2T %23
Explain, using appropriate diagrams, how a rise in the household saving rate cancause a fall in GDP, and how a fiscal stimulus might offset this.