Suppose the deficit were to be $500 billion during normal times, but increases to $750 billion...
Suppose the deficit were to be $500 billion during normal times, but increases to $750 billion because we are in a recession, then increases again to $900 billion because the government attempts to stimulate the economy.
Instructions: Enter your answers as whole numbers.
a. The structural deficit is: ? billion
b. The cyclical deficit is: ? billion
c. The amount associated with functional finance is: ? billion
Homework Answers
A) structural deficit = $ 500 billion
structural deficit is deficit level when economy is at full potential
B) cyclical deficit = (750-500)
= $ 250 billion
cyclical deficit is part of deficit , which is due to business cycle
C) functional finance = (900-750)
= $ 150 billion
Functional finance is that amount , which the govt is needed to reduce the effect of business cycle on economy
Add Answer to:
Suppose the deficit were to be $500 billion during normal times,
but increases to $750 billion...
2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c) Decrease,...
2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c) Decrease, increases d Increase, decreases which the recessionary gap 3) Suppose that the MPC is .75 and the U.S Federal Government reduces taxes by 10 million dollars. After 3 rounds of the multiplier process RGDP will change by a) 4.23 million b) 17.34 million c) 23.13 million dollars. d) 30 million 4) "George W. Bush's $152 billion tax rebate plan of 2008 was designed to...
During the recent recession sparked by financial crisis, the U.S. economy suffered tremendously. Suppose that, due...
During the recent recession sparked by financial crisis, the U.S. economy suffered tremendously. Suppose that, due to the recession U.S. GDP dropped from $14 trillion to $12.5 trillion. This fall in GDP was due to a drop in consumption of $1 trillion and a drop in investment of $500 billion. The U.S. government, under the Obama administration, responded to this recession by increasing government purchases Instructions: Round your answer to one decimal place a. Suppose that government spending had no...
Suppose that the current equilibrium GDP for a country is $13.5 trillion and that potential GDP...
Suppose that the current equilibrium GDP for a country is $13.5 trillion and that potential GDP is $14.3 trillion. How much does a change in tax revenue restore the economy to potential GDP, assuming the value of the government purchase multiplier is equal to 2 and a tax multiplier equal to -1.6 tax revenue decreases by $800 billion tax revenue increase by $800 billion tax revenue decrease by $500 bilion tax revenue decrease by $400 billion Suppose that the government...
1. Suppose that the intersection of the AD curve and the SRAS curve lies to the...
1. Suppose that the intersection of the AD curve and the SRAS curve lies to the right of the LRAS curve. The Keynesian prescription to resolve this problem would be ___________________ since the economy is _______________________. a.a decrease in government expenditures, in an inflationary gap b.an increase in taxes, in an inflationary gap c.a decrease in taxes, in a recessionary gap d.to do nothing, believed to be self-regulating e.a or b 2. Exhibit 11-1 Taxable Income Income Taxes $0 -...
7) Given the relationship between interest rates and planned investment planned investment A) increases if the inte...
7) Given the relationship between interest rates and planned investment planned investment A) increases if the interest rate drops from 6% to 4%. B) increases if the interest rate rises from 6% to 8%. C) is unaffected by any changes in interest rates. D) both A) and B) are correct. 8) To combat a recession with fiscal policy, the government should A) reduce government spending. B) reduce taxes on consumers to increase consumer disposable income. C) lower interest rates and...
Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the governm...
Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the government tax multiplier? A)-1.33 B) - 25 C) - 75 D) -4 E) -3 , which the recessionary gap. 2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c Decrease, increases d) Increase, decreases 3) Suppose that the MPC is.75 and the US Federal Government reduces taxes by 10 million dollars. After 3 rounds of...
FISCAL POLICY IN THEORY: March, 2020: we are on the verge of Congress and the President...
FISCAL POLICY IN THEORY: March, 2020: we are on the verge of Congress and the President passing legislation that will empower the federal government to spend an unprecedented amount of EXTRA money not seen since World War 2 ---- in order to address the pandemic but also to help cushion the blow financially of perhaps ten or twenty million Americans --- or more --- losing their jobs, and thus suffering a drop in income. The scale of the 2020 recession...
[40 MARAUT ECTION A Answer ALL questions in this section. (20 Marks) QUESTION 1 1 to 1 10 in your answer book Choo...
[40 MARAUT ECTION A Answer ALL questions in this section. (20 Marks) QUESTION 1 1 to 1 10 in your answer book Choose the most appropriate answer. Write down numbers write the letter that represents the correct answer. E.g. 1.11 A iswer book and next to each number 1.1 The rise in the value of one currency in relation to another is: a) Depreciation of the currency. b) An appreciation of the currency. c) A debasement of the currency. d)...
Q1 Which of the following are included and which are excluded in calculating this year's GDP....
Q1 Which of the following are included and which are excluded in calculating this year's GDP. Explain in each instance. a. A monthly scholarship cheque received by an economics student b. The purchase of an almost new tractor by farmer Kojo C. The cashing in of a savings bond d. An increase in business inventories e. Tim Horton's purchases a corner grocery store f. Fearless Qweenie Kong, a stuntwoman, purchases a life insurance policy for a billion dollars ($) g....
2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c) Decrease, increases d Increase, decreases which the recessionary gap 3) Suppose that the MPC is .75 and the U.S Federal Government reduces taxes by 10 million dollars. After 3 rounds of the multiplier process RGDP will change by a) 4.23 million b) 17.34 million c) 23.13 million dollars. d) 30 million 4) "George W. Bush's $152 billion tax rebate plan of 2008 was designed to...
During the recent recession sparked by financial crisis, the U.S. economy suffered tremendously. Suppose that, due to the recession U.S. GDP dropped from $14 trillion to $12.5 trillion. This fall in GDP was due to a drop in consumption of $1 trillion and a drop in investment of $500 billion. The U.S. government, under the Obama administration, responded to this recession by increasing government purchases Instructions: Round your answer to one decimal place a. Suppose that government spending had no...
Suppose that the current equilibrium GDP for a country is $13.5 trillion and that potential GDP is $14.3 trillion. How much does a change in tax revenue restore the economy to potential GDP, assuming the value of the government purchase multiplier is equal to 2 and a tax multiplier equal to -1.6 tax revenue decreases by $800 billion tax revenue increase by $800 billion tax revenue decrease by $500 bilion tax revenue decrease by $400 billion Suppose that the government...
7) Given the relationship between interest rates and planned investment planned investment A) increases if the interest rate drops from 6% to 4%. B) increases if the interest rate rises from 6% to 8%. C) is unaffected by any changes in interest rates. D) both A) and B) are correct. 8) To combat a recession with fiscal policy, the government should A) reduce government spending. B) reduce taxes on consumers to increase consumer disposable income. C) lower interest rates and...
Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the government tax multiplier? A)-1.33 B) - 25 C) - 75 D) -4 E) -3 , which the recessionary gap. 2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c Decrease, increases d) Increase, decreases 3) Suppose that the MPC is.75 and the US Federal Government reduces taxes by 10 million dollars. After 3 rounds of...
[40 MARAUT ECTION A Answer ALL questions in this section. (20 Marks) QUESTION 1 1 to 1 10 in your answer book Choose the most appropriate answer. Write down numbers write the letter that represents the correct answer. E.g. 1.11 A iswer book and next to each number 1.1 The rise in the value of one currency in relation to another is: a) Depreciation of the currency. b) An appreciation of the currency. c) A debasement of the currency. d)...
Q1 Which of the following are included and which are excluded in calculating this year's GDP. Explain in each instance. a. A monthly scholarship cheque received by an economics student b. The purchase of an almost new tractor by farmer Kojo C. The cashing in of a savings bond d. An increase in business inventories e. Tim Horton's purchases a corner grocery store f. Fearless Qweenie Kong, a stuntwoman, purchases a life insurance policy for a billion dollars ($) g....
Most questions answered within 3 hours.
-
1. Describe two similarities between the optical properties of
natural dielectric crystals and optical metamaterials?
asked 1 minute ago -
One mole of an ideal gas is heated slowly so that it goes from
the PV...
asked 10 minutes ago -
Write and Summarize the four possible outcomes of horizontal
gene transfer.
asked 16 minutes ago -
why would a contractor not want the design team to
completely design an item or system...
asked 15 minutes ago -
What is the purpose of private firm in listing of a
major stock exchange such as...
asked 20 minutes ago -
A study examined if the length of odontoblasts cells (cells
responsible for tooth growth) are affected...
asked 36 minutes ago -
For the reaction
8H2S(g)−⇀↽−8H2(g)+S8(g)8H2S(g)↽−−⇀8H2(g)+S8(g)
the equilibrium concentrations were found to be [H2S]=0.250
M,[H2S]=0.250 M, [H2]=0.460 M,[H2]=0.460...
asked 28 minutes ago -
n this problem you will determine the wavelength of the photon
required to excite a conjugated...
asked 37 minutes ago -
13. Which Wi-Fi frequency band offers 24 unlicensed
communications channels in the United States?
14. You’re...
asked 48 minutes ago -
While in your intestines, does E.Coli ingest anything? Would it
have a diet?
asked 51 minutes ago -
Below is a table showing the daily production numbers for 1
worker in both Mexico and...
asked 54 minutes ago -
The rate constant
k
for a certain reaction is measured at two different
temperatures:
temperature
k...
asked 54 minutes ago