4. In the 1960's the U.S economy faced inflationary pressures. Assume that in 1968 there was an AD Excess of $190 billion. Assume the MPC-95 (All the following problems require mathematical calculations.) a. What change in government expenditures would you have recommended?

4. In the 1960's the U.S economy faced inflationary pressures. Assume that in 1968 there was an AD Excess of $190 billion. Assume the MPC-95 (All the following problems require mathematical calculations.) a. What change in government expenditures would you have recommended?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.7P

See similar textbooks

Related questions

Q: structions: Enter your answers as a whole number. How much does aggregate demand need to change to…

Q: 18. What is the new equilibrium level of real GDP if government spending and taxes both increase by…

Q: Explain, using appropriate diagrams, how a rise in the household saving rate can cause a fall in…

A: GDP is the value of final goods and services produced in the country within a given period of time.

Q: Which of the following fiscal policy actions would be appropriate if the economy is experiencing an…

A: Fiscal policy is a macroeconomic policy tool that governments utilize to impact an economy's overall…

Q: What stimulates a rise of employment according to Keynes? An increase of supply A decline of minimum…

A: Answer: In Keynesian theory a rise in employment results due to a rise in effective demand.

Q: 4. In the New-Keynesian model where government expenditure is financed through taxation only, if…

A: When government raises its expenditure by 100 in order to increase output, it leads to a rise in the…

Q: 12. What is the purpose of the following fiscal policies? a. Contractionary b. Expansionary fiscal…

A: In economics and political science, fiscal policy is the use of government revenue collection and…

Q: Assume the United States has been in another recession for the past 10 months. Unemployment is 10%…

A: The AD-AS (aggregate demand-aggregate supply) example demonstrates national income determination and…

Q: 1.Which of the following is an example of fiscal policy? Select an answer and submit. For keyboard…

A: Fiscal policy refers to the policy used by the government to stabize the economy.

Q: 2. Give three examples of governments whose use of fiscal policy leaves a lot to be desired? Explain…

A: GDP is the total value of all goods and services produced within a country's borders over a specific…

Q: 1. Fiscal Policya. Assume the Economy has an inflationary gap with above average price level,…

A: a) Inflationary gap is said to exist when the real gross domestic product exceeds the maximum…

Q: Which of the following is used as a remedial measure during a recession in an economy? a. Decrease…

A: A recession refers to a period of economic slowdown. The recession is characterized by low levels of…

Q: What would have a larger effect on aggregate demand: $150 billion of tax cuts or $150 billion of…

A: Government expenditure is the amount of money spent by the government on welfare projects and for…

Q: If US economy moves into an expansion while producing more than potential GDP, then: a) government…

A: When the economy moves into an expansion, actual GDP exceeds potential GDP.

Q: Type your answers in all of the blanks and submit X₂ X Ω· The following figure shows an economy.…

A: Gross domestic product is the final combination of goods and services in a country. GDP is an…

Q: 10. In order to close an inflationary gap, the government needs to implement which of the following…

A: An inflationary gap, also known as an expansionary gap, refers to the situation in an economy where…

Q: 7. Examine whether the following items are built-in stabilizers or discretionary changes.…

A: Note-- Since you have posted the questions with multiple subparts, we will solve the first three…

Q: What specific fiscal policy tools would you use to stimulate aggregate demand and how? also include…

A: Fiscal policy tools use to stimulate aggregate demand:To stimulate the aggregate demand, the fiscal…

Q: Which of the following is NOT a problem associated with implementing fiscal policy. a. Policy lags…

A: The issue is to establish one of the stated works that isn't a difficulty when inputting measures of…

Q: What is fiscal imbalance? Fiscal imbalance is the _______ value of the government's commitments…

A: What is the fiscal imbalance? Fiscal imbalance refers to a situation where all of the government's…

Q: The table below shows hypothectical figures of revenue and spending for the Canadian government. For…

A: Net tax revenue will be calculated as tax revenue minus transfer payments. The transfer payments…

Q: 12. How much must government spending increase to eliminate the GDP gap? e

Q: 16) What is the first signal that policy makers may need to examine expansionary fiscal economic…

A: Expansionary fiscal policy : Due to increment in government expenditure , there will be increase in…

Q: • S = -1250 + 0.4 Y, I= 750 – 1600i • Ms= 1100, Mt = 0.15Y and Mp = 0.10 Y • A. Calculate Y eq, S,…

A: Consumption expenditure refers to the amount of money consumers spend on goods and services, and…

Q: 1. Why is a $100 billion increase in government spending on goods and services more expansionary…

A: In an economy, a 1% change in government spending will have different impact on the real GDP as…

Q: 3. What is fiscal equalization? Give an example

A: Fiscal equalization refers to the process of redistributing financial resources from the national…

Q: If taxes are lowered, we can expect supply-side economists to support the decision to do so because…

A: Supply-side economists argue that efficient economic growth will occur when tax is low. Because when…

Q: Fiscal Policy

A: Introduction of Fiscal policy:-It is a policy via which a government makes adjustments in its tax…

Q: Instructions: Enter your answer as a whole number. If you are entering a negative number include a…

A: The recession means that the economy would result in the output which is less than the long run…

Q: 2. Considering the recent pandemic situation, Consumers fear a recession, they start reducing…

A: An expansionary fiscal policy will most effective in this case. The two major examples of…

Q: Hello, I would like help on this assignment. Thank you. Fiscal Policy Assume the Economy has an…

A: (1)In economics, the term inflationary gap is a kind of situation where there exists a positive…

Question

Fiscal Policy
A closer Look at Fiscal Policy
4. In the 1960's the U.S economy faced inflationary pressures. Assume that in 1968 there
was an AD Excess of $190 billion. Assume the MPC-95 (All the following problems require
mathematical calculations.)
a. What change in government expenditures would you have recommended?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Under what general macroeconomic circumstances might a government use expansionary fiscal policy? When might it use contractionary fiscal policy?
Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending by the University of Illinois is not fiscal policy? Why is a cut in the payroll tax fiscal policy whereas a cut in a state income tax is not fiscal policy?
What is meant by fiscal policy? How far can it be used to ensure, a high level of employment?
What is fiscal imbalance? Fiscal imbalance is the _______ value of the government's commitments to pay benefits minus the _______ value of its tax revenues. A. future; future B. future; present C. present; future D. present; present
Please help
3. What is fiscal equalization? Give an example
Please help
AS AD AD Real GDP Which fiscal policy action MIGHT the government take to move the economy from Point A to Point B? A increase the discount rate increase open market operations increase government spending D increase taxes ©2021 Illuminate Education TM, Inc. Price Level
Question 15/28 IV A BOOKMARK 15 MULTIPLE SELECT: If the government decides to utilize a contractionary fiscal policy, which of the following actions can it take? Pick all that apply. A Tax cuts B Tax increases C Spending cuts D Spending increases DELL esc Ce @ # $ % & 1 2 3 4 7 e r y k S f g. C V b m 个 N
explanation. Be sure to exp Assume the United States has been in another recession for the past 10 months. Unemployment is 10% and GDP has dropped $1.9 trillion from its previous peak of $ 20.8 trillion. The housing and heavy equipment industries have been hit the hardest. Inflation has been near the 2% target but has started to dip below. Also, the countries average MPC is 60. Determine the best fiscal policy/strategy to help the economy recover and explain why it is the best choice. Be sure to reference Aggregate Demand and Aggregate Supply and explain your specific tools in your answers. Calculations Explanation Graph (More space for the explanation on the back)
Que 41: What do you understand by cyclicality of the fiscal policy?
Why is income increased after "fiscal policy"? Why does our demand for income increase too?