The figure to the right shows a pair of budget deficit functions. Assume thatinitially the budget deficit function is (G+ID-T) The economy, initially atY₁, then experiences a recession. The government attempts to reduce thesize of the recession with an expansionary fiscal policy, and the economyends up at an output level of Y₂. The effect on the government budgetdeficit would be best shown asO O OA. the change from 0 to D1.B. the change from 0 to D2.C. the change from 0 to D3.OD. the change from D1 to D2.E. the change from D1 to D3.Click to select your answer and then click Check Answer.Deficit/Surplus (in billions of dollars)500-400-300-200-IDSD2D1100-0--100--200--300-The Budget Deficit Function300800Y₂Y₁9001200(G+ID-T)₁(G+iD-T)Real GDP (in billions of dollars)dou*

The figure to the right shows a pair of budget deficit functions. Assume that initially the budget deficit function is (G+ID-T). The economy, initially at Y₁, then experiences a recession. The government attempts to reduce the size of the recession with an expansionary fiscal policy, and the economy ends up at an output level of Y₂. The effect on the government budget deficit would be best shown as OA. the change from 0 to D1. B. the change from 0 to D2. OC. the change from 0 to D3. OD. the change from D1 to D2. OE. the change from D1 to D3. Deficit/Surplus (in billions of dollars) 500- 400- 300+ 200- IDs. D2 D1 100- 0- -100- -200- -300-4 The Budget Deficit Function 300 800 Y₂ Y₁ 8 900 1200 (G+D-T)₁ (G+iD-T)o Real GDP (in billions of dollars) 5

The figure to the right shows a pair of budget deficit functions. Assume that initially the budget deficit function is (G+ID-T). The economy, initially at Y₁, then experiences a recession. The government attempts to reduce the size of the recession with an expansionary fiscal policy, and the economy ends up at an output level of Y₂. The effect on the government budget deficit would be best shown as OA. the change from 0 to D1. B. the change from 0 to D2. OC. the change from 0 to D3. OD. the change from D1 to D2. OE. the change from D1 to D3. Deficit/Surplus (in billions of dollars) 500- 400- 300+ 200- IDs. D2 D1 100- 0- -100- -200- -300-4 The Budget Deficit Function 300 800 Y₂ Y₁ 8 900 1200 (G+D-T)₁ (G+iD-T)o Real GDP (in billions of dollars) 5

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1) An expansionary fiscal policy increases a government budget deficit or reduces a government budget surplus. True or False 2)Automatic stabilizers are an example of discretionary fiscal policy. True or False 3) A contractionary fiscal policy will reduce a government budget deficit or increase a government budget surplus and reduce borrowing by the Treasury. True or False 4) Selling Treasury bonds to finance a federal deficit crowds out private investment by driving interest rates down. True or False 5) An increase in government transfer payments will shift the aggregate demand curve to the right A. by the initial change in consumption arising from the change in transfer payment × the spending multiplier. B. by the initial change in income arising from the change in transfer payment × the spendingmultiplier. C. by the change in transfer payments × times the spending multiplier. D. by the change in transfer payments × times the marginal propensity to consume. 6) In late 2008,…
In 2050, the government has collected $9,409 billion in revenues from taxes but has spent $10,985 billion on government purchases and transfers. What is the budget surplus(+)/deficit(-) for 2050? Note: A deficit should be negative, and a surplus should be positive. Enter your answer in billions.
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.
How would I do a and b?
Suppose the economy is in a recession. In this case automatic stabilizers will Group of answer choices cause the government's budget to move toward a surplus. cause the government's budget to move toward a deficit. not cause the government's budget to move in any particular direction. cause the government's budget to move toward a balanced budget.
In which of the following cases does the size of the government’s debt and deficit indicate potential problems for the economy? Explain your answer. a) The government’s debt is relatively low, but the government is running a large budget deficit as it builds a high-speed rail system to connect the major cities of the nation. b) The government’s debt is relatively high due to a recently ended deficit-financed war, but the government is now running only a small budget deficit. c) The government’s debt is relatively low, but the government is running a budget deficit to finance the interest payments on the debt. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Define fiscal policy and explain the role of income taxes and government spending as fiscal policy tools.
Consider an economy in which the marginal propensity to consume is 0.8 and GDP is currently at 12,000. a) The government wishes to increase GDP to 13,000, and it is considering changing only one of its fiscal tools: 1. government purchases 2. taxes 3. transfer payments How much would the government have to change each of these fiscal policy tools to achieve its goal? (Use the simple spending multiplier for this part and below.) b) Suppose instead that the government wishes to reduce GDP to 10,000, and again, it is considering using only one of its three available fiscal policy tools. How much would it change each of these fiscal tools to achieve its goal?
Please Answer precisely and clearly. Thank you