Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Chapter 11, Problem 12CQ
To determine
Keynesian view on federal budget.
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According to Keynesian economics, what impact would a balanced budget amendment to the constitution requiring the federal government to balance its budget annually have on the economy?
According to Keynesian economics, what impact would a balanced budget amendment to the constuition requiring the federal government to balance its budget annually have on the economy?
How would a Keynesian Economist use Fiscal Policy to fight a Recession? Please do not
write about Monetary Policy here, only Fiscal Policy.
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Economics: Private and Public Choice
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- Keynesian economics defends budget balance. However, according to economists, budget balance may exacerbate the effects of the business cycle. Isn't it also a Keynesian view to use discretionary policy to smoothen the business cycles? Aren't those two views contradictory?arrow_forwardWhat might be some Keynesian prescriptions to get the economy out of an economic slump (both fiscal and monetary)?arrow_forwardIn an economy, marginal propensity to consume (MPC) is 0.75 where Keynesian model works. Now, if government increases both its expenditure and taxes by 1000, then Income increases by 4000; Income increases by 3000; Income increases by 1000; Income do not change?arrow_forward
- Identify similarities and differences in the way Keynes and Hayek think about information and knowledge in the economic system. Discuss how their disagreement affects the way their position with respect to policymaking.arrow_forwardWhat is supply-side or "trickle-down" economics? Why do Keynesians reject supply-side economics? Does the history of the marginal income tax structure in the U.S. support or challenge the idea of tickle down economics?arrow_forwardIf planned expenditures are below actual production, what will happen to income? Explain the process by which this happens.arrow_forward
- Why does the budget require a forecast of the economy? Under what circumstances would actual government spending and tax revenue fall to match the budget as approved?arrow_forwardUsing the concept in Keynesian economics, which one of the following may not be an effective fiscal policy when there is inflation? a) increasing aggregate demand b) increasing corporate taxes. c) increasing personal taxes. d) decreasing government purchases.arrow_forwardWhat is the philosophical, economic essence of Keynesian doctrine or “Keynesianism” that emerged from the experience and attempted explanations of the Great Depression ? What would all Keynesians believe, in order to be “Keynesian?”arrow_forward
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