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Homework Answers
1) Solution: the deficit.
Explanation: When government outlays exceed government revenues in a particular year, this is called a budget deficit
2) Solution: operational lag
Explanation: operational lag refers to the amount of time it takes operational policies to achieve their intended.
3) Solution: The crowding-out effect
Explanation: The unintended impacts of fiscal policy includes inequitable taxes and crowding out of private sector
4) Solution: move the economic equilibrium back to the full-employment level by increasing aggregate demand
Explanation: According to Keynes, during a recession, overall demand falls because people who are out of work are not spending.
5) Solution: recognition lag
Explanation: Recognition lag refers to the amount of time it takes for monetary or fiscal authorities to recognize a problem in the economy.
Add Answer to:
(11)
The amount by which annual government spending exceeds annual
government tax revenue is called
the...
16) Suppose a law was passed to authorize more spending on roads, but several months later...
16)
Suppose a law was passed to authorize more spending on roads,
but several months later the first dollar had not been spent. This
delay is an example of a(n)
recognition lag.
political lag.
administration lag.
operational lag.
(17)
What is the goal of automatic stabilizers?
To reduce the volatility in
the currency market
To flatten the peaks and
valleys in the business cycle
To enhance the multiplier
effect by increasing the effectiveness of fiscal policy
To...
1. If the economy is at full employment, increases in government spending: A) have a multiplier...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
(6) Imagine that the economy is in a recession. Which one of the following tactics is...
(6) Imagine that the economy is in a recession. Which one of the following tactics is a way to increase output by shifting aggregate demand outward? Raising taxes to increase the government surplus Increasing government spending Increasing the required reserve ratio Imposing tariffs on foreign goods (7) In the short run, supply shocks cause prices to __________ and the quantity demanded to __________. increase; increase increase; decrease decrease; increase decrease; decrease (8) Good deflation...
The graph shows an economy below full employment. To restore full employment, the government incr...
The graph shows an economy below full employment. To restore full employment, the government increases government expenditure by $0.5 trillion. Draw a curve to show the effect of the increase if it is the only change in spending plans. Label the curve ADo AE Price level (GDP price index, 2009-100) Potential GDP The increase in government expenditure sets off a multiplier process. Draw a curve that shows the multiplier effect that returns the economy to full employment. Label it AD,...
(1) Which of the following is not a tool of fiscal policy? Government spending Taxes Tax...
(1) Which of the following is not a tool of fiscal policy? Government spending Taxes Tax incentives Private investment (2) Which of the following statements helps to explain why the economy can be slow to recover from a recession? Workers are less motivated because of reduced expectations, which reduces total output. There is not as much money in circulation to fuel new investment. Wages do not fall quickly, which delays an adjustment to a higher output level....
Econ HW, please help! UTION # FISCAL POLICY NAME the mix of government spending and taxing...
Econ HW, please help!
UTION # FISCAL POLICY NAME the mix of government spending and taxing in order to balance the Fiscal policy is best defined as: uncontrolled government spending, altering the mix of govern budget every fiscal year. changes in govern macroeconomic goals. vernment spending and taxing for the purpose of achieving certain minimizing government expenditures over the fiscal year. , while reases in government spending and lower taxes represent decreases in government spending and higher taxe contractionary fiscal...
Determine how each of the following monetary or fiscal policy would shift the aggregate demand curve. Illustrate and explain the following effect. a. As the economy is in the state of recession, the government decided to increase government spen
1. Determine how each of the following monetary or fiscal policy would shift the aggregate demand curve. Illustrate and explain the following effect. a. As the economy is in the state of recession, the government decided to increase government spending. b. Central bank decided to fight an inflationary economy by reducing money supply. c. Under full employment economy, the government has decided to increase taxes on income earned by people.
19. Which of the following explains why the government should not increase spending by the entire...
19. Which of the following explains why the government should not increase spending by the entire amount of the AE shortfall to move the economy to full employment? A. Price level changes will make up for the difference between the fiscal stimulus and the AE shortfall. B. The multiplier process will contribute to an additional increase in aggregate demand that will cause an inflationary gap. C. The government can increase taxes to create an additional increase in aggregate expenditure. D....
A. If there is complete crowding out as a result of an increase in government spending...
A. If there is complete crowding out as a result of an increase in government spending there will be a decrease in aggregate demand. no change in aggregate demand. an increase in aggregate demand. a downward movement along the aggregate demand curve. B. According to Buchanan and Wagner, why is there a political bias toward expansionary fiscal policy rather than contractionary fiscal policy? In a democracy, expansionary fiscal policy prescriptions are more politically popular than are the policy prescriptions associated...
The graph below depicts an economy where an increase in aggregate demand has caused inflation. The...
The graph below depicts an economy where an increase in aggregate demand has caused inflation. The economy's current level of real GDP (Y) is above its long-run equilibrium. This is illustrated by the long-run aggregate supply curve (LRAS) and a price level 2) above the equilibrium value of Pe Fiscal Policy Price Level Real GDP Which of the following is an example of an automatic stabilizer that would help this economy move toward full employment again A reduced need for...
16)
Suppose a law was passed to authorize more spending on roads,
but several months later the first dollar had not been spent. This
delay is an example of a(n)
recognition lag.
political lag.
administration lag.
operational lag.
(17)
What is the goal of automatic stabilizers?
To reduce the volatility in
the currency market
To flatten the peaks and
valleys in the business cycle
To enhance the multiplier
effect by increasing the effectiveness of fiscal policy
To...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
The graph shows an economy below full employment. To restore full employment, the government increases government expenditure by $0.5 trillion. Draw a curve to show the effect of the increase if it is the only change in spending plans. Label the curve ADo AE Price level (GDP price index, 2009-100) Potential GDP The increase in government expenditure sets off a multiplier process. Draw a curve that shows the multiplier effect that returns the economy to full employment. Label it AD,...
Econ HW, please help!
UTION # FISCAL POLICY NAME the mix of government spending and taxing in order to balance the Fiscal policy is best defined as: uncontrolled government spending, altering the mix of govern budget every fiscal year. changes in govern macroeconomic goals. vernment spending and taxing for the purpose of achieving certain minimizing government expenditures over the fiscal year. , while reases in government spending and lower taxes represent decreases in government spending and higher taxe contractionary fiscal...
19. Which of the following explains why the government should not increase spending by the entire amount of the AE shortfall to move the economy to full employment? A. Price level changes will make up for the difference between the fiscal stimulus and the AE shortfall. B. The multiplier process will contribute to an additional increase in aggregate demand that will cause an inflationary gap. C. The government can increase taxes to create an additional increase in aggregate expenditure. D....
The graph below depicts an economy where an increase in aggregate demand has caused inflation. The economy's current level of real GDP (Y) is above its long-run equilibrium. This is illustrated by the long-run aggregate supply curve (LRAS) and a price level 2) above the equilibrium value of Pe Fiscal Policy Price Level Real GDP Which of the following is an example of an automatic stabilizer that would help this economy move toward full employment again A reduced need for...
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