Define what is 'automatic stabiliser' in fiscal policy, and provide 2 examples

Q: 2) Current Real GDP = $21.5T Potential Real GDP = $20T MPS = .2 How much would be necessary to close…

A: Recessionary gap refers to the gap between potential output and actual output where actual output is…

Q: answer the following question: Was gov- ernment investment used as stabilisation policy following…

A: The Stabilization Policy is a policy formulated by the government or the central bank of an economy…

Q: Decrease in government expenditure Increase government expenditure Decrease in government…

A: Aggregate expenditure is the current value of all the finished goods and services in the economy.

Q: (2 pts.) Refer to the above graph. Suppose the economy is in a recession and expansionary fiscal…

A: Shortrun  equilibrium is the level at which short run Aggregate supply curve is equal to aggregate…

Q: Explain how the conduct of fiscal policy affects consumption and investment in equilibrium.

A: Fiscal policy is a macroeconomic policy that is implemented by the government for monitoring and…

Q: How can a tax cut increase investment, and what is the impact on the economy?

A: A tax is a compulsory financial charge or levy imposed by a government on individuals, businesses,…

Q: Which of the following is contractionary fiscal policy? raising income tax rates subsidizing basic…

A: A contractionary fiscal policy is implemented by the government through the reduction of its…

Q: Que 41: What do you understand by cyclicality of the fiscal policy?

A: Cyclicality of fiscal policy refers to the tendency of government spending and taxing policies to…

Q: If someone passes 1 trillion  Infrastructure Bill,Graphical show the projected effect of this policy…

A: IS-MP model: It refers to a model under which the interest rate and output will be determined in the…

Q: How 'Automatic Fiscal Stabilisers may work within the UK economy. Outline any problems that may…

A: Fiscal policy means an increase in expenditure or reducing taxes such that the IS curve shifts…

Q: If tax multiplier is -3, then MPS is equal ?? Answer please

A: Tax multiplier shows how a variation in taxes impact the real GDP of the economy. It is the ratio of…

Q: 16 Use the following graph to answer the next question. Price Level ADo i AD₁ AS AD₂ AD2 Yo Y₁ Real…

A: It is given that the economy is currently operating at output level Y2; but the full employment…

Q: Price level LRAS SRAS, SRAS, AD, AD2 Real GDP Image Copyright Protected @ 69857AEREIU HJOP6587…

A:

Q: If the MPC is 0.9 what will happen to GDP if the government cut spending bt $2.

A: ∆Y = 11-c∆G where Y = GDP            c = MPC            G = government spending

Q: For each of the following figures, indicate what changes in fiscal policy would result in a shift…

A: Fiscal policy refers to the policy which is implemented by the government in order to stimulate the…

Q: 1. An article in the Wall Street Journal criticized the concept that an increase in government…

A: Marginal Propensity to Consume (MPC): MPC is the proportion of additional income that an individual…

Q: Does Ricardian equivalence imply that changes in the timing of government expenditure have no effect…

A: Government expenditure refers to the total amount of money spent by a government in a given period…

Q: What does the concept of "crowding out" mean in macro economics according to John Maynard Keyn

A: In some cases, the government embraces an expansionary fiscal policy position and builds its…

Q: Suppose real GDP is currently $12.5 trillion and potential real GDP is $13 trillion. If the…

A: Aggregate demand is the sum of consumption spending, Investment spending, Government spending  and…

Q: Using the aggregate expenditures model, answer the questions below to show how government fiscal…

A: Fiscal policy can be used to close a recessionary gap—a situation in which expenditure is below full…