Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 27, Problem 4.1P
To determine
Identify the effects of fiscal policy and
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Which of the monetary or fiscal policy tools do you think would be most effective at improving the U.S. economy? (One paragraph)
What effect did the economic program have on the federal deficit?
Do treasury securities finance a federal budget deficit? If so would the government purchase treasury securities to finance the budget deficit or would they sell them?
Chapter 27 Solutions
Principles of Economics (12th Edition)
Knowledge Booster
Similar questions
- How could the government lower the federal deficit?arrow_forwardThe federal government ran a budget surplus in the late 1990 and in the year 2000, but has since returned to running a budget deficit. Explain why reducing the budget deficit can cause short-term pain in the form of lower employment, higher unemployment, and a recession. (Use diagram and analysis)arrow_forwardThe reason why fiscal policy should be in tune with monetary policy when the economy is in the recession phase. The importance of the Central Bank in the financial market.arrow_forward
- Mention a type of fiscal policy or monetary policy that is currently being implemented. Then discuss how government spending, taxes, or interest rates are being changed.arrow_forwardDavid Rubenstein mentions that stock and bond traders are not presently very worried about the increase in the federal deficit. However, he adds that they might become more concerned in six to twelve months. The accompanying diagram shows the market for loanable funds. Use the graph to show the effect of an increase in the federal deficit on this market. Real interest rate (%) Loanable funds ($) Supply Demand Why might traders be worried about the deficit increasing? The resulting change in the interest rate stocks and bonds - less valuable. will makearrow_forwardLook into the current level of the national debt and the federal deficit in the U.S. Pick any government program and research how much the U.S. spends on it. Does the amount surprise you? What might happen if the budget for the program were increased or reduced? Should the current deficit and debt be cut down? What would be some pros and cons of reducing them?arrow_forward
- Please evaluate the following statement: When the U.S. federal government has a budget deficit—spending more than its current tax revenues—and covers the short-fall by issuing government bonds this will result in inflation. [Hint: Your answer may depend on who is buying these newly issued U.S. government bonds.]arrow_forwardExplain the monetary policy and fiscal policy and the differences between them. Comment on the impact of these policies on consumers and businesses.arrow_forwardIn an attempt to reduce the large budget deficit, the government raised taxes and reduced government expenditure but unemployment soared and the budget deficit actually increased. A leading economist remarked: 'The time to attempt to reduce the deficit is when the economy is at overfull employment. Then policies designed to reduce the deficit will not only work but they will also achieve other desirable macroeconomic goals.' Do you agree with the economist? Why or why not?arrow_forward
- Economists at which of the following government offices help formulate spending plans and regulatory policies? Office of Management and Budget Congressional Budget Office Department of the Treasury The Federal Reservearrow_forwardHow does the federal government finance a budget deficit? It prints more money. It purchases U.S. Treasury bonds. It cuts spending on entitlement programs. It borrows funds by selling Treasury bonds.arrow_forwardWhat is the importance of fiscal policy during times of economic recession? What is the reason why fiscal policy should be in tune with monetary policy when the economy is in the recession phase? How important is the Central Bank in the financial market?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Macroeconomics: Principles and Policy (MindTap Co...EconomicsISBN:9781305280601Author:William J. Baumol, Alan S. BlinderPublisher:Cengage Learning
Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Macroeconomics: Principles and Policy (MindTap Co...
Economics
ISBN:9781305280601
Author:William J. Baumol, Alan S. Blinder
Publisher:Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co