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?
16) What is the first signal that policy makers may need to examine expansionary fiscal economic policy A. A decrease in AS B. A decrease in AD C. A decrease in LRSA D. An increase in AS
Please see attachment Answer neatly Show all your work. Based on the above diagram: 1. Calculate MPC? 2. If Private Investment increases by 100, calculate the new level of NI. 3. If full-employment NI is at 3000, by how much should Government spending change? 4. What is the new NI, If 1/2 of those government expenditures are financed through taxes?
Which of the following statementsabout how fiscal policy should mostappropriately be used in a crisis iscorrect? a. If fiscal policy is usedappropriately, a fiscal deficitshould appear duringrecessionary gaps and asurplus during inflationary gaps b. Fiscalpolicy should be used at anyand all points of the cycle toaccelerate growth c. None of these statements iscorrect d. If fiscal policy is usedappropriately, a fiscal surplusshould appear duringrecessionary gaps and a fiscaldeficit during inflationarygaps
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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
2
100 T. 80 G 60 40 O $ 100 200 300 400 500 600 700 800 900 GDP Refer to the diagram, in which Tis tax revenues and Gis government expenditures Al figures are in billons of doltars if the ful-employment ODP400 billion while the actual GDP is $200 billion: (Show your calcutations) a. What is the actual budget deficit? b. What is the cyclically adjusted budget deficit? c. The value of cyclically adjusted deficit identifies which type of discretionary fiscal policy? 20 G T.G ($)
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