Government Spending, Taxes, and Fiscal Policy-End of Chapter ProblemThe president has just signed a new budget that drastically cuts taxes without decreasing government spending. Whenasked how he plans to address the dramatic increase in deficits that will occur due to the tax cuts, the president responds,"We're going to see some amazing economic growth because of this new policy, so much growth that we're going to growour way out of any short-term increases to government debt."If this extra economic growth doesn't materialize, what are some of the risks to the U.S. economy?Interest payments on the federal debt will consume a larger portion of the federal budget, potentially displacing othergovernment priorities.Higher government debt may make future borrowing more difficult.It gives foreign creditors substantial control over U.S. economic policy.It places an unsupportable burden on future generations.

Fiscal policy refers to the set of policies that the government uses to control the fluctuations in…

The president has just signed a new budget that drastically cuts taxes without decreasing government asked how he plans to address the dramatic increase in deficits that will occur "We're going to see some amazing economic growth because our way out of any short-term increases to government debt." of this new policy, due spending. When to the tax cuts, responds, so much growth that we're going to grow. the president

The president has just signed a new budget that drastically cuts taxes without decreasing government asked how he plans to address the dramatic increase in deficits that will occur "We're going to see some amazing economic growth because our way out of any short-term increases to government debt." of this new policy, due spending. When to the tax cuts, responds, so much growth that we're going to grow. the president

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

If a government shows the fiscal deficit of $ 40,000 billion the revenue expenditure on the interest payment is $12000 billion how much is the primary deficit?
In a government budget revenue deficit is $ 60,000 billion and the borrowings are dollars 76,000 billion how much is the fiscal deficit?
What will be the revenue deficit if the revenue expenditure are $91 And the revenue receipts are $80?
In an attempt to reduce the large budget deficit, the government raised taxes and reduced government expenditure but unemployment soared and the budget deficit actually increased. A leading economist remarked: 'The time to attempt to reduce the deficit is when the economy is at overfull employment. Then policies designed to reduce the deficit will not only work but they will also achieve other desirable macroeconomic goals.' Do you agree with the economist? Why or why not?
What is a budget deficit? How does it affect interest rates, investments and economic growth?
To eliminate the deficit (and halt the growth of the net public debt), a politician suggests that “we should tax the rich.” The politician makes a simple arithmetic calculation in which he applies a higher tax rate to the total income reported by “the rich” in a previous year. He says that the government could thereby solve the deficit problem by taxing “the rich.” What is the major fallacy in such a claim?
As long as tax rates are not very high, a decrease in tax rates will tend to a. increase the budget deficit b. decrease the budget deficit c. leave the budget deficit unchanged d. cause the budget deficit to first decrease then increase
Calculate interest payments if fiscal deficit is $77 million and primary deficit is $50 million
Some Economists argue that Fiscal policy have no effects in the long run on employment and aggregate output in the economy. What are the arguments behind this belief? EXplain. If indeed the government has to apply the expansionary fiscal policy what would eventually happen to the economy. Explain step by step the process impacting the economy.
If Canada's primary budget deficit is negative, then Canada's debt will be ___________ next year.
Transcribed image text: Assume that a government begins to run a large budget deficit. We might expect a simultaneous
Using examples from 2008-currently, explain fiscal policy. In your answer be sure to include what Fiscal Policy is and how some of the recent policies have impacted the economy (GDP and Budgets) in both the short term and the long term.