Match the correct policy with its description. Column A 1. 2. 3. 4. During a contraction or recession, the government can do two things: Decrease Taxes Or Increase Spending During a period of excessive inflation (during a period of expansion), the government can do two things: Increase Taxes Or Decrease Spending Increased lending by banks to customers (increased money supply) Lower Interest Rates on loans and bank accounts Increased borrowing from the Fed by banks Decreased lending by banks to customers (decreased money supply) Higher Interest Rates on loans and bank accounts Decreased borrowing from the Fed by banks O Column B a. Expansionary Fiscal Policy b. Contractionary Monetary Policy c. Contractionary Fiscal Policy d. Expansionary Monetary Policy

Match the correct policy with its description. Column A 1. 2. 3. 4. During a contraction or recession, the government can do two things: Decrease Taxes Or Increase Spending During a period of excessive inflation (during a period of expansion), the government can do two things: Increase Taxes Or Decrease Spending Increased lending by banks to customers (increased money supply) Lower Interest Rates on loans and bank accounts Increased borrowing from the Fed by banks Decreased lending by banks to customers (decreased money supply) Higher Interest Rates on loans and bank accounts Decreased borrowing from the Fed by banks O Column B a. Expansionary Fiscal Policy b. Contractionary Monetary Policy c. Contractionary Fiscal Policy d. Expansionary Monetary Policy

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 15P

See similar textbooks

Similar questions

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
× My Lectures Which statement is INCORRECT? our federal government. The policy mix is the combination of tax and spending policy of O The best policy mix to reduce raging inflation is a combination of contractionary monetary and fiscal policy. US, monetary and fiscal policy are determined independently of one another. Reserve and the president and congress disagree, then it is possible In the If the Federal O Contractionary fiscal policy is when the president and congress raise income taxes for monetary policy to be contractionary while fiscal policy is expansionary spending. or cut government
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
P PE ж LRAS YN SRAS AD Y Consider the graphfor this and the next two questions. Assume the following graph depicts the situation in the US right before the financial crisis that recently engulfed the USA. Which curve would you shift in the graph to explain the initial impact of the financial crisis? Indicate the new position of the economy and what it implies. Prescribe a fiscal policy (contractionary or expansionary) policy you will use to bring the economy to its long-term full employment state.
Determine how each of the following monetary or fiscal policy would shift the aggregate demand curve. Illustrate and explain the following effect. a. Assuming the economy is currently producing above the full employment output, the government decided to increase the personal income tax as a form of contractionary fiscal policy. Illustrate and explain the effect of the policy using AD-AS curve. b. With the recession due to COVID-19, the central bank has decided to lower down discount rates and reserve requirements of the commercial bank. Illustrate and explain the effect of the policy using AD-AS curve.
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?
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 $200 billion: (Show your calcutations) a. What is the actual budget deficit? b. What is the cyclically adjusted budget deficit? c. The value of cyclically adjusted deficit identifies which type of discretionary fiscal policy? 20 G T.G ($)
TRUE - OR - FALSE Using fiscal policy to increase aggregate demand may have undesirable inflationary consequences. O True O False
SRAS PL AD2 AD Y, Y2 REAL GDP The Aggregate Demand Model shows an increase in Aggregate Demand or GDP, Which type of Fiscal Policy was used and why? O Contractionary Policy to increase GDP and Increase Inflation O Contractionary Policy to decrease GDP and lower the unemployment rate O Expansionary Policy to raise GDP and lower the unemployment rate O Expansionary Policy to raise GDP and lower Inflation PRICE LEVEL
The Canadian federal budget moved from a surplus of 9.6billioninthe2007-2008 fiscalyeartoade ficitof5.8 billion the next year, and a large deficit of S55.6 billion in 2009-2010. a. Suppose real GDP was at potential in each of the first two years. What can you conclude about the cause of the change in the budget deficit? Show this change in a diagram of the budget deficit function. b. Suppose from 2008-2009 to 2009-2010, two things happened: real GDP fell and the government implemented an expansionary fiscal policy (both of which were true). Show these two separate events in a diagram of the budget deficit function.
When the economy is in a recession, the government can use expansionary iscal policy to stimulate and encourage économic growth. Which of the following scenarios represent expansionary fiscal policies from both a supply perspective and a demand perspective? Choose one or more: OA The Federal Reserve increases the money supply and lowers the interest rate while the government simultaneously reduces future taxes. OB. The government lowers tax rates and issues a partial refund of taxes that have already been paid. OC The government raises tax rates and reduces payments of unemployment benefits. OD The government lowers tax rates and undertakes a replacement.of old bridges and roads. Suppose that, during a recession, the government borrows money to provide free wireless Internet access in urban areas. Whichof the following statements are correct? Choose one or more: RA This policy will likely be accompanied by an impact lag as the policy takes time to make its way to the people. O B. The…
The graph below shows real GDP levels over time. Answer the following questions based on this groph. Real GDP T Business Cycle Time Y" a. At time T. what is the economy experiencing? O full-employment output an economic expansion an economic contraction b. In order to smooth out the business cycle, what type of fiscal policy should the government undertake? contractionary fiscal policy expansionary fiscal policy c. What type of actions might the government take? a decrease in taxes and an increase in government purchases a decrease in both taxes and govemment purchases an increase in taxes and a decrease in government purchases an increase in both taxes and government purchases