2. The U.S. economy is in recession and has a large recessionary gap. Describe what automatic fiscal policy might occur. Describe a fiscal stimulus that could be used that would not increase the budget deficit. A. What are the levels of employment and potential GDP in OilPatch, what is the real wage rate paid by employers, and what is the after-tax real wage rate received by workers?

2. The U.S. economy is in recession and has a large recessionary gap. Describe what automatic fiscal policy might occur. Describe a fiscal stimulus that could be used that would not increase the budget deficit. A. What are the levels of employment and potential GDP in OilPatch, what is the real wage rate paid by employers, and what is the after-tax real wage rate received by workers?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose a government has no debt and a balanced budget. Suddenly it decides to spend $5 trillion while raising only $4 trillion worth of taxes. Instructions: Enter your responses rounded to one decimal place. a. What will be the government's deficit? 24 1000 billion b. If the government finances the deficit by issuing bonds, what amount of bonds will it issue? $4 1000 billion C. At a 3 percent rate of interest, how much interest will the government pay each year? $4 30 billion d. Add the interest payment to the government's $5 trillion expenditures for the next year, and assume that tax revenues remain at $4 trillion. In the second year, compute the () Deficit: $ billion (ii) Amount of new debt (bonds) issued to finance the deficit in the second year: $ billion (iii) Total debt at the end of the second year: $ billion (iv) Debt service requirement: $ billion < Prev 5 of 5 Next W tv N FEB 877 9.
Find the value of fiscal deficit if the primary deficit is 6100 and the interest payments are 50?
3. What is fiscal equalization? Give an example
7. The national debt a. Is paid off each fiscal year when the debt is refinanced. b. Will never be paid off in any given year, but it will be entirely paid off when it is refinanced over a number of years. Will be paid off when the budget is finally balanced. Equals the dollar amount of outstanding U.S. Treasury bonds. c d
Which is a good fiscal policy when inflation is very low and unemployment is very high? Decrease the money supply O Increase government purchases of goods and services Cut government transfer payments Decrease the budget deficit
Please explain briefing how fiscal policy works, what spending multipliers are, when is the spending multiplier small or large, what policy and implementation lags affect the potency of fiscal policy, and what is the relationship between budget deficits and national public debt and their implications.
3. The Japanese economy is stuck in a recessionary gap. The proper fiscal policy could include a(n) a decrease in taxes. b. increase in transfer payments. C. increase in government purchases. d All of the above are correct.
#7
Always use economic terms, diagrams. "Counter-cyclical fiscal policy works. If consumers and businesses lose confidence because of the changing world, the government can fix this economic problem - that is what the Biden $1.9 trillion stimulus was all about. Sure, there might be some issues with the deficit, but given a recovery, the government can pay that deficit off. Also, since we are in a very inflationary period again we might expect counter-cyclical fiscal policy to resolve some of the debt issues." Please explain this comment. (Hint: don't forget to use an AS AD diagram and possibly a business cycle diagram).
1. Give three examples of governments that are adept in the use of fiscal policy. 2. Give three examples of governments whose use of fiscal policy leaves a lot to be desired? Explain your thinking. 3. What is potential GDP? What role does it play in fiscal and monetary policies?
9. The lag associated with fiscal policy can: magnify economic fluctuations. stimulate output beyond full employment. depress output below full employment. all of the above.
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