Analysis of the Great Depression indicates thata. even though monetary and fiscal policies were highly expansionary, they were unable to offset the economic downturn.b. the depth of the economic plunge, if not its onset, was the result of monetary, fiscal, and regulatory policies.c. a reduction in tax rates could not prevent the economic downturn from spiraling into a depression.d. even though monetary policy was expansionary, restrictive fiscal policy dominated during the 1930s.0000

The objective of the question is to understand the economic conditions and policies during the Great…

Answered: Analysis of the Great Depression…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter16: Macro Policy Debate: Active Or Passive?

Section: Chapter Questions

Problem 3.4P

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The architects of monetary and fiscal policy seek to use the tools at their disposal to meet macroeconomic policy objectives. a. What are some challenges – specifically around the timeliness and accuracy of data – that they face in trying to decide what policies to implement? b. In addition to these, what additional timing challenges are unique to fiscal policy (but that monetary policy makers can avoid)? How do monetary policy makers avoid them? c. Given these challenges, reflect on what you think policy makers should do going forward
In Country B, the current unemployment rate is lower than the natural rate of unemployment. A. Draw a correctly labeled graph of the long run and short run Phillips Curve. Label the current short run equilibrium point A. B. Identify a fiscal policy action that will return the economy to full employment. C. Draw a correctly labeled graph of the loanable funds market. Show the effect of the fiscal policy action you selected in Part B on the real interest rate in the short run.
*Does monetary or fiscal policy have a longer time lag? Why?
The economy is at full employment, but the government is disappointed with the growth rate of real GDP. It wants to increase real GDP growth by stimulating investment. At the same time, it wants to avoid an increase in the price level. a.Suggest a combination of fiscal and monetary policies that will achieve the government’s objective. b.Which policy would you recommend that the government adopt? c. Explain the mechanisms at work under your recommended policy. d.What is the effect of your recommended policy on the composition of aggregate demand? eWhat are the short-run and long-run effects of your recommended policy on real GDP and the price level?
What is a key distinction between monetary policy and fiscal policy in economic management?A. Monetary policy involves government spending and taxation, while fiscal policy focuses on interestrates and money supply.B. Monetary policy is set by the central bank, while fiscal policy is determined by the government'sbudget decisions.C. Monetary policy primarily influences employment and economic growth, while fiscal policy mainlyaffects inflation.D. Monetary policy is a short-term strategy, while fiscal policy is a long-term approach to economicmanagement.
a. Which of the following are considered limitations of fiscal policy? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. ? implementation lag ? unemployment lag ? recognition lag ? liquidity lag ? legislative lag b. Which of the following are considered limitations of monetary policy? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. ? unemployment lag ? implementation lag ? recognition lag ?liquidity lag ? legislative lag
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Explain the difference between fiscal policy and monetary policy. What are some of the reasons these macroeconomic policies are used? Elaborate on reasons these policies are used.
What is the best combination of fiscal policies and monetary policies for a country like Japan whose price levels are increasing while unemployment is being controlled? a.None of the choices is correct b.Decrease taxes, decrease government spending and decrease money supply c.Decrease taxes, increase government spending and increase money supply d.Increase taxes, decrease government spending and decrease money supply
As you have learned in Unit 8 (this week), monetary and fiscal policy play important roles in economic stimulation and or stabilization. In this regard: a. When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy? b. When is it inappropriate to use monetary and fiscal policy to stimulate or stabilize the economy? c. What specific fiscal policy tools would you use to stimulate aggregate demand and how? d. What specific monetary policy tools would you use to stimulate aggregate demand and how? e. What is your conclusion, should policymakers use the monetary and or fiscal policy to stimulate aggregate demand? Explain briefly.
What is the best combination of fiscal policies and monetary policies for a country like Japan whose price levels are increasing while unemployment is being controlled? a. Decrease taxes, increase government spending and increase money supply b. Decrease taxes, decrease government spending and decrease money supply c. None of these choice is correct d. Increase taxes, decrease government spending and decrease money supply
The graph below depicts an economy where an increase in aggregate demand has caused Inflation. Assume the government decides to conduct fiscal policy by changing taxes to bring Inflation under control. Price Level 160 150 140 130 120 110 100 90 80 70 60 50 Fiscal Policy LRAS AS Real GDP (billions of dollars) AD₁ AD 40 80 160 240 320 400 480 560 640 720 800 Instructions: Round your answers to 2 decimal places. If you are entering a negative number include a minus sign. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? billion b. If the MPC is 0.75, how much do taxes need to change to shift aggregate demand by the amount you found in part a? $ billion Suppose Instead that the MPC is 0.5. c. How much does aggregate demand and taxes need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and taxes need to change by $ billion.

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