Some politicians have suggested that the United States enact a constitutional amendment requiring that the federal government balance its budget annually. Such an amendment, if strictly enforced, would force the government to enact a contractionary fiscal policy whenever the economy experienced a severe recession.   This is because when the economy enters a recession, ???

Q: Q11. For various reasons, fiscal policy changes automatically when output and employment fluctuate.…

A: Recession: - it is an economic condition where the overall economic activity declines in an economy.

Q: Which of the following illustrates the effectiveness lag? A.Policymakers implement contractionary…

A: Effectiveness lag can be understood as when the policy is implemented or any change in policy is…

Q: structions: Enter your answers as a whole number. How much does aggregate demand need to change to…

A:

Q: An example of fiscal policy is an increase in_____by the_____, which_____aggregate demand.       1)…

A: Fiscal policy refers to intervention by the government to eliminate the challenges faced by…

Q: Should fiscal policy encourage more consumption or more saving? Does it matter? I need a reason why.

A: The fiscal (F) and monetary (M) policies help to control and maintain economic fluctuations such as…

Q: Can governments use expansionary fiscal policy or expansionary monetary to effectively fight…

A: Answer: The use of fiscal policy and monetary policy is an effective tool to control the…

Q: What policy might the federal government implement with regard to taxes and spending to help stop…

A: Fiscal policy refers to the changes in the federal government purchases and taxes, which are…

Q: Draw a correctly labeled aggregate demand and aggregate supply graph and show each of the following:…

A: Aggregate Demand (AD) is the total demand for final goods and services in an economy during an…

Q: Economist Arthur Laffer famously pointed out that, in some cases, income tax revenue can actually go…

A: As the tax rate goes down, expectation of tax aversion or tax avoidance likewise goes down. Each…

Q: Suppose the US Federal Government decides to increase its spending without issuing debt by raising…

A: In short run, if taxes are imposed, that will raise the price above initial equilibrium level. If we…

Q: Explain what are the lags in macroeconomic policies. Do these lags have more effect on monetary…

A: Macroeconomic policies are used to stabilize the economy in different phases of the business cycle.…

Q: Use the following graph to answer the next question. Price Level I I AS Yo AD, AD₂ ADO Y₁ Y₂ Y₂ Real…

A: Aggregate demand refers to the overall demand for the goods and services that are produced within…

Q: Suppose the economy is in recession. Policymakers estimate that aggregate demand is $100 billion…

A: Given InformationAggregate Demand = 100MPC = 0.75Now, Multipler = 1/(1 - 0.75)…

Q: Inflation rates in the US have recently been at their highest level in decades. Imagine your local…

A: Fiscal policy refers to the use of government spending and taxes to influence the performance of an…

Q: How does increased government spending affect the aggregate demand curve?

A: Aggregate demand is the sum of all the components of demand.  Components of AD are Consumption ,…

Q: Using an aggregate supply and demand graph, show what happens when expansionary fiscal policies are…

A: Expansionary fiscal policy refers to the government policy that increases in government expenditure…

Q: The federal government is considering some fiscal policy alternatives. Will its choice between the…

A: 1. Military procurement as well as scientific research is the two areas where the government makes…

Q: Was fiscal policy effective when the US economy was experiencing stagflation during the 1970s? Why…

A: Stagflation alludes to a circumstance when the economy was confronting high inflation and high…

Q: 16 Use the following graph to answer the next question. Price Level ADo i AD₁ AS AD₂ AD2 Yo Y₁ Real…

A: It is given that the economy is currently operating at output level Y2; but the full employment…

Q: If the economy is producing in the intermediate zone of the ad/as would you suggest discretionary or…

A: The government of the country takes the help of fiscal policy measures to maintain balance in the…

Q: Using diagrams can you please show how the rise in the household saving rate can cause a fall in…

A: The IS curve is downwards sloping to the right which indicates to the fact that the rate of…

Q: Use the model of aggregate demand ang aggregate supply (long run and short run) to explain the…

A: According to Keynes, Aggregate demand have following components,  AD = C + I + G + NX  AD -…

Q: Suppose that Shen, an economist from a research facility in Washington, and Valerie, another…

A: Economists are professionals who study and dissect economic frameworks, ways of behaving, and…

Q: Assuming the economy is in long run and the govt implemnents a tax cut of $420 Billion, there is no…

A: Here, it is given that the government implements a tax cut of $420 billion in the economy when…

Q: Governments may achieve certain economic goals; say controlling inflation or boosting economic…

A: Answer: All the economic goals such as controlling inflation, boosting growth, increasing…

Q: The use of government purchases (G) as a fiscal policy tool can have an effect on long-run growth in…

A: Government purchase is also known as the government spending on goods and services. The federal’s,…

Q: Which of the following is not an example of government spending hike that will increase aggregate…

A: The government expenditure would result in the expenditure of the government in infrastructure and…

Q: For each of the following fiscal policy proposals, determine whether the primary focus is on…

A: Let us examine each fiscal policy proposal individually to establish if it is primarily concerned…

Q: The image attached, is a screen shot of the question. The question is: If the marginal propensity…

A: Please find the answer below.

Q: a. Which statement best describes the classical fiscal policy prescription for a recession? Select…

A: Note:- Since we can only answer one question at a time, we'll answer the first one. Please repost…

Q: The hypothetical information in the following table shows what the situation will be in 2016 if the…

A: A contractionary fiscal policy refers to a policy that is aimed at reducing economic activity in an…

Q: "Even if there is full information and that wages and prices are fully flexible as what the…

A: Expansionary fiscal approach incorporates tax breaks, move installments, refunds and expanded…

Q: The economy is in a recession The government enacts a policy to increase the real GDP by $10 bilion.…

A: Recession refers to a period in which economic activity is reduced. The government has to increase…

Q: Suppose the economy begins at full employment. Label this starting point as point "1." Then,…

A: The term macroeconomic policy refers to economic policy that focuses on accomplishing specific…

Q: Use the chart to answer the following question. Fiscal Policy Government Spending Taxes A increase…

A: The tools of fiscal policy are: 1. Government spending  2. Taxes

Q: from the news article…

A: Aggregate demand is the total demand of all the goods and services produced in an economy. Aggregate…

Q: An editorial in the Wall Street Journal states: “We don’t put much stock in future budget forecasts…

A: When government spending surpasses receipts in a given fiscal term, a federal budget deficit…

Q: In the diagram, Qf is the full-employment output. If the economy's current aggregate demand curve is…

A: The entire demand for all products and services generated in the economy at any one moment is known…