Answered: A key feature of all automatic…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 13P

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Is Medicaid (federal government aid to low-income families and individuals) an automatic stabilizer?
Why do automatic stabilizers function automatically?
Can you indicate 2 built in stabilizers and show they function during a recession and expansion.
Which of the following is NOT an automatic stabilizer? a. income taxes b. unemployment insurance c. Medicaid d. food stamps e. monetary policy
Automatic stabilizers cause government revenues to during a recession and cause government expenditures to during a recession. (Choose the answer that fills in the two blanks) a. Increase; decrease b. Increase; increase C. Decrease; decrease d. Decrease; increase e. Not change; not change
Built-in Stability a.Explain the difference between discretionary and non-discretionary fiscal policy, b.Explain the key relationships that supports the built-in stabilizer, c.Explain thoroughly how it works to reduce inflation d.Explain thoroughly how it works to reduce recession e.Explain why the presence of the built-instabilizer is important to managing the macro economy.
The most important automatic stabilizer is: a. accurate economic forecasts. b. the central bank. c. the tax system. d. government spending.
A. Differentiate between discretionary fiscal policy and nondiscretionary or built-in stabilization policy. B. When in a recession a government has the option to increase government spending or decrease taxes to stimulate the economy. Discuss which piece of GDP is being targeted when each is used.
7a. What is an automatic stabilizer? List three automatic stabilizers in the United States. 7b. Use a Macro Model to depict an economy moving below potential GDP. 7c. Use a causal chain to depict the mitigating effect of automatic stabilizers.
Automatic stabilizers are increases in spending and reductions in taxes that__ ?which one? a.Are enacted by Congress when the economy enters in a recession b.Are the result of existing tax and revenue spending rules c.Are required by the Department of Treasury as needed d.Are enacted by the President when the economy enters in a recession
What are the three fiscal policy tools and how would each be used to counter a contractionary gap?
13

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A key feature of all automatic stabilizers is that they 1. require new legislation 2. are aimed at expanding the economy 3. involve existing legislation 4. involve transfer payments which one and why