Q44 Question 44During normal times, discretionary fiscal policyO is very effective.O is probably not very effective.O is more effective than automatic stabilizers.works well because there are no lag problems.

During normal times, discretionary fiscal policy is not much effective in stabilizing economy, as…

Answered: Question 44 During normal times,…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 1P

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Similar questions

What is the main advantage of automatic stabilizers over discretionary fiscal policy?
Explain how automatic stabilizers work, both on the taxation side and on the spending side, first in a situation where the economy is producing less than potential GDP and then in a situation where the economy Is producing more than potential GDP.
What is the difference between discretionary fiscal policy and automatic stabilizers?
Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending by the University of Illinois is not fiscal policy? Why is a cut in the payroll tax fiscal policy whereas a cut in a state income tax is not fiscal policy?
Why do automatic stabilizers function automatically?
During the Great Recession of 20082009, what actions would have been required of Congress and the President had a balanced budget amendment to the Constitution been ratified? What impact would that have had on the unemployment rate?
Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below and sketch a diagram using aggregate demand and aggregate supply curves to illustrate your answer: A recession. A stock market collapse that hurts consumer and business confidence. Extremely rapid growth of exports. Rising inflation. A rise in the natural rate of unemployment. A rise in oil prices.
How would a balanced budget amendment change the effect of automatic stabilizer programs?
A government starts off with a total debt of $3.5 billion. In year one, the government runs a deficit of 400 million. In year two, the government runs a deficit of 1 billion. In year three, the government runs a surplus of 200 million. What is the total debt of the government at the end of year three?
What is the main reason for employing contractionary fiscal policy in a time of strong economic growth?
What is the difference between expansionary fiscal policy and contractionary fiscal policy?

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Question 44 During normal times, discretionary fiscal policy O is very effective. O is probably not very effective. is more effective than automatic stabilizers. works well because there are no lag problems.