a).Pifferentiate between spending and money hypothesis.briefly discuss with money hypothesis.explain destabilizing effect of deflation which support the money hypothesis of great depression. use graph. (b) Mathematically proof that balance budget multiplier is one.interpret it. 01

a).Pifferentiate between spending and money hypothesis.briefly discuss with money hypothesis.explain destabilizing effect of deflation which support the money hypothesis of great depression. use graph. (b) Mathematically proof that balance budget multiplier is one.interpret it. 01

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Optimal fiscal policy relies on the (a) Friedman rule (b) Laffer curve (c) model's productivity shocks (d) Federal Reserve Bank 2. In the short-run, money (a) does not enter into the representative consumer's utility function. (b) is non-neutral (because prices are rigid/sticky, often for long periods of time). (c) is the equivalent of holding a "riskless asset." (d) is used as a proxy for the pricing kernel in the sequential Lagrangian analysis.
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Select the correct option and explain why it is correct : a) Critics of discretionary fiscal policy argue that discretionary policy : 1) has uncertain effects 2) has an impact lag that is too short. 3) raises more inflation than policy rules. 4) has long recognition and implementation lags. b) The largest share of expenditures by state and local governemtnn is for : 1) Transfer payment 2) national defense 3) law enforcement 4) purchase of goods and services c) Countercyclical fiscal policy is designed to : 1) shift the inflation adjustment line so that real GDP is equal to potential GDP 2) reduce unemployment further when it is already at a low level 3) increase potential GDP 4) shift the aggregate demand curve so that real GDP equals potential GDP. d) Which of the following types of taxes provide the most revenue for the federal governemtn 1) Payroll taxes 2) income taxes 3) Sales taxes 4) corporate taxes
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ces Me Graw Hill Use the data related to cyclical vs. structural budget balances (in billions of dollars) to answer two questions. Budget Balance Cyclical Component + Structural Component 236 58 178 128 -1 129 -83 -75 -107 -271 -58 -355 -20 -298 11 -259 17 -178 -26 -251 ly clear Fiscal Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -158 -378 -413 -318 -248 -161 -459 -1,413 -1,294 -1,300 -1,087 -680 -485 -439 -585 -665 -779 -984 -3,310 -300 -264 -208 -207 -168 -86 -76 -53 11 53 -403 billion of fiscal (Click to select) - ▬▬ billion of fiscal (Click to select) -433 -1,162 -994 -1,036 -879 -473 -317 -353 -509 Instructions: Enter your responses as a whole number. How much fiscal stimulus or restraint occurred between, a. 2007 and 2008? $ b. 2017 and 2018? $ -612 . -790 -1,037 -2,907 Q Search I
6. Suppose real GDP in an economy equals its potential output of $2,000 billion, the multiplier is 2.5, investment is raised by $200 billion, and the increased investment does not affect the economy's potential. a. Show the short- and long-run effects of the change upon real GDP and the price level, using the graphical framework for the model of aggregate demand and aggregate supply. b. Would real GDP rise by the multiplier times the change in investment in the short run? In the long run? Explain.