The government has the ability to influence the level of output in the short run using monetary and fiscal policy. There is some disagreement as to whether the government should attempt to stabilizethe economy.Which of the following are arguments in favour of active stabilization policy by the government? Check all that apply.Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses.Central banks can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates.Businesses make investment plans many months in advance.Changes in government purchases and taxation must be passed by parliament.Which of the following are examples of automatic stabilizers? Check all that apply.Corporate income taxesAn emergency bailout of the financial sector by the governmentBank rateO O O OO O O 17. Problems with Countercyclical Fiscal PolicyCountry Y is entering a recession and is debating a stimulus package of tax cuts and increased government spending to counter it. Advocates of the package contend that the situation in Country Ymakes countercyclical fiscal policy appropriate, while opponents claim the opposite. For each of the following characteristics of Country Y, indicate whether it supports arguments for the stimulus oragainst the stimulus.In Country Y, temporary government spending can be quickly decreased when it is no longer warranted.O Supports arguments against the stimulusSupports arguments for the stimulusThe central bank of Country Y, is not going to use monetary policy to counter the recession.Supports arguments against the stimulusO Supports arguments for the stimulus

h of the following are arguments in favour of active stabilization policy by the government? Check all that apply. Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. Central banks can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates. Businesses make investment plans many months in advance. Changes in government purchases and taxation must be passed by parliament. h of the following are examples of automatic stabilizers? Check all that apply. Corporate income taxes O O O O

h of the following are arguments in favour of active stabilization policy by the government? Check all that apply. Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. Central banks can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates. Businesses make investment plans many months in advance. Changes in government purchases and taxation must be passed by parliament. h of the following are examples of automatic stabilizers? Check all that apply. Corporate income taxes O O O O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In preparing their estimates of the stimulus package's effect on GDP, Obama administration economists estimated a government purchases multiplier of 1.57. Economist Robert Barro argues that the government purchases multiplier would be lower than the administration's estimate, and economists Lawrence Christiano, Martin Eichenbaum, and Sergio Rebelo argued that the multiplier would be higher than the administration's estimate. when the unemployment rate is high; when the value of the dollar is depreciating against foreign currencies when the federal budget is in surplus; when government transfer payments are declining during wartime; when short-term interest rates are near zero during a recession; when the inflation rate is relatively low
Automatic stabilizers are increases in spending and reductions in taxes that. Are enacted by the President when the economy enters in a recession Are enacted by Congress when the economy enters in a recession Are the result of existing tax and revenue spending rules Are required by the Department of Treasury as needed
The $2.2 trillion stimulus Coronavirus Aid, Relief, and Economic Security Act (CARE act) passed in March 2020 and the $2.3 spending bill of Consolidated Appropriations Act 2021 are the examples of applications of ____? A. Consumer Policy B. Fiscal Policy C. Monetary Policy D. None is correct.
income taxes and government spending during a recession. Automatic stabilizers increase; increase increase; decrease decrease; increase decrease; decrease
Which of the following would not be considered an automatic stabilizer? Question 13 options: Income tax Unemployment compensation Education spending Food stamps
Automatic stabilizers cause government revenues to during a recession and cause government expenditures to during a recession. (Choose the answer that fills in the two blanks) a. Increase; decrease b. Increase; increase C. Decrease; decrease d. Decrease; increase e. Not change; not change
Which of the following is an example of an automatic stabilizer? tax rates the MPC the amount of dollars collected in taxes interest rates
When GDP and incomes are high, the government collects more dollars in tax revenue. When they're low, the government collects fewer tax dollars. These higher and lower amounts help even out the economy without having to wait for changes in tax rates or other legal matters. For these reasons, tax revenues (not rates) are best described as automatic stabilizers. contractionary fiscal policy monetary policy O the marginal propensity to consume
A. Differentiate between discretionary fiscal policy and nondiscretionary or built-in stabilization policy. B. When in a recession a government has the option to increase government spending or decrease taxes to stimulate the economy. Discuss which piece of GDP is being targeted when each is used.
Let’s assume that the economy in the United States is higher than the potential GDP. If the government uses a contractionary fiscal policy to decrease GDP, the: Group of answer choices aggregate demand curve will shift to the right. aggregate supply curve will shift to the left. aggregate supply curve will shift to the right. aggregate demand curve will shift to the left.
a) What are the three fiscal policy tools and how would each be used to counter a contractionary gap? b) True or False and explain: Fiscal Policy is effective at reducing the duration of an economic contraction. c) True or False and explain: Households always react to tax changes in a predictable manner.
Which of the following is an example of contractionary fiscal policy? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. decreasing the money supply a b increasing the interest rate increasing government spending d increasing taxes