Sub-part
A
The fiscal policy effectiveness with a fall in the MPC
Concept Introduction:
Fiscal Policy: Fiscal policy is the policy by which government regulates the nation’s economy by adjusting the government spending and controlling the tax rates. It tries to influence the
Sub-Part
B
The fiscal policy effectiveness with a shorter lags in the effect of fiscal policy.
Concept Introduction:
Fiscal Policy: Fiscal policy is the policy by which government regulates the nation’s economy by adjusting the government spending and controlling the tax rates. It tries to influence the demand side of the economy.
Sub-Part
C
The fiscal policy effectivenesswhen consumers are more concerned with permanent income thancurrent income.
Concept Introduction:
Fiscal Policy: Fiscal policy is the policy by which government regulates the nation’s economy by adjusting the government spending and controlling the tax rates. It tries to influence the demand side of the economy.
Sub-Part
D
The fiscal policy effectiveness with a more accurate measurement of the natural rate of
Concept Introduction:
Fiscal Policy: Fiscal policy is the policy by which government regulates the nation’s economy by adjusting the government spending and controlling the tax rates. It tries to influence the demand side of the economy.
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- Is expansionary fiscal policy more attractive to politicians who believe in larger government or to politicians who believe in smaller government? Explain your answer.arrow_forwardSeveral problems of timing may arise in connection with fiscal policy. Which of the following is not one of them? Select one: a. An administrative lag occurs due to a significant lag between the time the need for fiscal action is recognized and the time action is taken by a government. b. Operational lag also occurs between the time fiscal action is taken and the time that action affects output, employment, or the price level. c. Crowding out lag occurs since governments delay to take action for not to crowd out exports. d. The recognition lag is the time between the beginning of recession or inflation and the certain awareness that it is actually happening.arrow_forwardWhich of the following is an expansionary fiscal policy? increase in taxes only both increase in taxes and increase in government spending decrease in government spending decrease in taxesarrow_forward
- Describe the shortcomings of Fiscal Policy. Be as thorough as possible.arrow_forwardWhich of the following statements about automatic stabilizers in Canada is the most accurate? They are the responsibility of the provinces since they, unlike the federal government, do not face lag problems. They are controlled by the Bank of Canada to help manage the business cycle. They are able to completely eliminate all the lag problems associated with fiscal policy. They are changes in government transfer payments and tax revenues that vary automatically and inversely to business cycle changes.arrow_forwardWhich of the following action is a most likely fiscal policy measure for an economy that is in an inflationary period?a) Increase taxesb) Decrease the discount ratec) Decrease taxesd) Increase spendingarrow_forward
- If an increase in government spending is accompanied by a reduction in spending by firms and households, economists call this: a) Fiscal policy b) Crowding out c) The accelerator d) Hysteresisarrow_forwardFiscal policy is a plan for taxing and spending that is designed to steer an economy in a desired direction True Falsearrow_forwardClassify each statement based on the type of fiscal policy to which it refers. Expansionary fiscal policy Supply-side fiscal policy Contractionary fiscal policyarrow_forward
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