Graph the long-run impact of a permanent reduction in the fiscaldeficit and show how this policy changes the long run valueimmediately and over time. Label the axes on the graph and indicatethe direction of changes.1. Real wage rate2. Real interest rate3. Rental Price of capital4. GDP per workerI

A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates,…

Answered: Graph the long-run impact of a…

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 4TY

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Under what general macroeconomic circumstances might a government use expansionary fiscal policy? When might it use contractionary fiscal policy?
22.
Which of the following is NOT a tool of fiscal policy. O taxes O government spending Onterest rates none of the above Question 2 Assume the economy is in a deep recession. The appropriate fiscal policy response would be to: raise taxes and raise govemment expenditures cut taxes and cut govermment expenditures raise taxes and cut government expenditures O cut taxes and increase government expenditures D Question 3 Crowding out refers to the fact that: Tax cuts will cause inflation O Tax cuts may result in higher interest rates which will "crowd out" business investment spending O increased government spending will crowd out spending on imports none of the above
Hi this question is for macroeconomics but on bartleby does not show any option for macroeconomics As a result of COVID-19, the Government of Canada has been actively using a discretionary fiscal stimulus policy. Using the Aggregate Supply – Aggregate Demand model, illustrate the intended impact of this policy on Aggregate Demand. Has the fiscal stimulus policy been effective? Why or why not? When the discretionary fiscal stimulus policy has ended, what actions with respect to the budget, will the government have to consider to address the debt level resulting from the discretionary fiscal stimulus policy?
If the economy is at point E, what policy should be implemented, contractionary or expansionary? Why? Name one fiscal policy (like increasing tax rate, decreasing government expenditure, etc.) and one monetary policy (such as increasing interest rate) that can be implemented in this case. LAS Price E SAS AD Real Output
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QUESTION 20 Consider an economy that is producing an aggregate output of Y2 shown in the figure below. The economy fäces can be closed by Aggregate price level which fiscal policy. LRAS SRAS AD2 AD1 AD Y2 Yp Y1 Real GDP Oa. an inflationary gap; expansionary O b-a recessionary gap; expansionary Oc a recessionary gap; contractionary O d an inflationary gap; contractionary
Suppose an economy can be represented by the folowing table, in which employment is in millons of workers and GDP and AE are expressed in billions of dollars: Employment 100 Real GDP Aggregate Expenditures 1275 1350 1425 1500 1575 1650 1200 105 1300 1400 1500 1600 1700 110 115 120 125 fut employment is 120 milion workers? What is its what kind of expenditure oap exists size? Suppose government spending, taxes, and net exports ane all independent of the level of rcal GDP. What is the multplier an ths economy? below the econemy's potential, what is the size of the recessionary expenditure qapt
2
16) Doing a contractionary phase of the business cycle which of the following most likely of occurs?
Figure 8-24. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 9 Tax Revenue a∞rontm ~ - X 8 7 6 5 4 3 2 1 A B Refer to Figure 8-24. Tax revenue would [I B. All of the above are correct. A. decrease if the economy began at point C and then the tax rate was increased. Answer Key:B Tax Size OC. decrease if the economy began at point B and then the tax rate was decreased. D. increase if the economy began at point F and then the tax rate was decreased.
the following macro mo det consumptron : c • C' +cYq and Ya = do posable income Desine d Investment: = I' +jY Government Expenditure s. G =G'+gy Exports = EX : X' IM =F' Imports Taxes : T:T't tY a) what is the equation for y" for this economy? b) Derive for this each of the following multipliers economy. ) Ke' 5) Kpi 2) k 6) Kx' 3) KG' 7) Kg8 "BB 4) Kpi 2 why Might one that the is argue 1 probably a 2 vavia b le g number ? hegathe

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