Suppose that a federal election is called at a time when the economy is experiencing a recessionary gap and there is a budget deficit.The leader of Party A promises, if elected, to immediately balance the budget by slashing government spending.The leader of Party B promises, if elected, to stimulate the economy with a tax decrease.What would be the effect of each party's proposed policy on each of the following.a. the level of GDP.b. the level of NTR.The effect of Party A's proposed policy on:(Click to select)(Click to select)c. the level of unemployment.(Click to select)d. the budget deficit.(Click to select)e. the price level(Click to select)The effect of Party B's proposed policy on:(Click to select)(Click to select)(Click to select)(Click to select)(Click to select)

The objective of the question is to understand the impact of two different economic policies - one…

Answered: Suppose that a federal election is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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economic The hypothetical information in the following table shows what the situation will be in 2016 if the government does not use fiscal policy: table (image) a. If the government wants to move real GDP to its potential level in 2016, should it use expansionary policy or contractionary policy? In your answer make sure you explain whether the government should be increasing or decreasing government purchases and taxes.b. If the government is successful in moving real GDP to its potential level in 2016, state whether each of the following will be higher, lower or the same as it would have been if they had taken no action: i. Real GDP ii. Potential GDP iii.The inflation rate iv.The unemployment rate.c. Draw a dynamic aggregate demand and aggregate supply graph to illustrate your answer. Make sure that your graph contains LRAS curves for 2015 and 2016; SRAS curves for 2015 and 2016; AD curves for 2015 and 2016, with and without fiscal policy action; and equilibrium real GDP and the…
What are the reasons of fiscal policy not being effective in an economy according to classical economists?
Consider the economy of Canada. Its households spend 55% of increases in their income and saves 45 %. There are no taxes and no foreign trade. Currently, Canada has a recessionary gap, the governments aim is to get actual output to increase by 220 billion dollars. How much of a tax cut do they need to have to achieve the overall increase in output of 220 billion dollars?
Expenditures are always made with clear policy to guide them. Politics never enters the equation? True or False
Our economics have redone their calculations. They now estimate that citizensin our country have an MPC of 0.60. We can fix the problem by decreasing GDP by 250. How much should we increase taxes?
Of the four choices below, which causes a shift in the Supply of dollars to the right? A. An expansionary fiscal policy that raised U.S. income and increased U.S. imports.B. An expansionary fiscal policy that raised U.S. income and reduced U.S. imports.C. A contractionary fiscal policy that reduced U.S. income and lowered U.S. imports.D. A contractionary fiscal policy that reduced U.S. income and increased U.S. imports.
Suppose the economy begins at full employment. Label this starting point as point "1." Then, suppose that a long strike by coal miners reduces the coal supply and increases the price of coal. Show the effects on your graph and label the new equilibrium point "2." Lastly, suppose our government wants the economy to return to full-employment as quickly as possible. Should the government intervene? If so, show the impact of successful fiscal policy on your graph. Label this new equilibrium point "3."
Describe some fiscal policies that governments are presently using to counter the impact of coronavirus on an economy. Discuss if these policies are more, or less likely, to deliver long-term social equity. Could these policies be used to create more social security/welfare; discuss and compare any negative consequences that these policies could have on an economy and critique the various ways the government could minimise or remove such negative consequences?
Which of the following is NOT a component of federal fiscal policy? A. Federal tax revenues B. Federal government expenditures C. Federal budget deficit D. All of the above are components of federal fiscal policy
Who is in charge of fiscal policies, and how do their different multipliers work?
During an economic _______, there is a decline in economic activity, including falling GDP, rising unemployment, and reduced consumer spending. To combat this, governments often implement _______ fiscal policies to stimulate the economy. A) expansion, contractionaryB) downturn, expansionaryC) boom, contractionaryD) recession, expansionary.
In 10+ sentences, explain how we can eliminate the national debt using fiscal policy. Explain how we could change taxes and/or spending in order to balance the budget. Be specific on who you raise taxes on and where you cut spending. Make sure that you explain why you are making these changes to our fiscal policy. Also, discuss how these contractionary policies will impact our economy.

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