Government expenditures, G. and tax revenues, T Refer to the figure Deficit GDP, Real a. The cyclically ac of GDP. O actual O normal O full-emplo O equilibriur

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

please answer b), c), d) 

Government expenditures, G.
and tax revenues, T
Refer to the figure below to answer the questions that follow.
Surplus
G
Deficit
GDP,
GDP,
GDP,
Real domestic output, GDP
level
a. The cyclically adjusted budget measures what the federal deficit or surplus would be if the economy reached the
of GDP
O actual
O normal
O full-employment
O equilibrium
Transcribed Image Text:Government expenditures, G. and tax revenues, T Refer to the figure below to answer the questions that follow. Surplus G Deficit GDP, GDP, GDP, Real domestic output, GDP level a. The cyclically adjusted budget measures what the federal deficit or surplus would be if the economy reached the of GDP O actual O normal O full-employment O equilibrium
b. If the cyclically adjusted budget is balanced, then
O government is engaging in either expansionary or contractionary policy.
O the actual budget is in surplus.
government is not engaging in either expansionary or contractionary policy.
O the actual budget is also balanced.
c. Suppose the full-employment, noninflationary level of real output is GDP3 (not GDP2) in the economy depicted in the figure. If the
economy is operating at GDP2 instead of GDP3, its current fiscal policy is
O contractionary, since a surplus would exist.
O contractionary, since a deficit would exist.
O balanced, since there is no deficit.
O expansionary, since a surplus would exist.
d. If the government wants to move the economy to full employment, it should
O cut taxes or increase spending.
O increase taxes or increase spending.
O cut taxes or decrease spending.
O cut taxes or keep spending constant.
Transcribed Image Text:b. If the cyclically adjusted budget is balanced, then O government is engaging in either expansionary or contractionary policy. O the actual budget is in surplus. government is not engaging in either expansionary or contractionary policy. O the actual budget is also balanced. c. Suppose the full-employment, noninflationary level of real output is GDP3 (not GDP2) in the economy depicted in the figure. If the economy is operating at GDP2 instead of GDP3, its current fiscal policy is O contractionary, since a surplus would exist. O contractionary, since a deficit would exist. O balanced, since there is no deficit. O expansionary, since a surplus would exist. d. If the government wants to move the economy to full employment, it should O cut taxes or increase spending. O increase taxes or increase spending. O cut taxes or decrease spending. O cut taxes or keep spending constant.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Depletion Allowance
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
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education