Macroeconomics (Book Only)
12th Edition
ISBN: 9781285738314
Author: Roger A. Arnold
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 8WNG
(a)
To determine
Illustrate graphically when the fiscal policy destabilizes the economy.
(b)
To determine
Illustrate graphically when the fiscal policy eliminates the inflationary gap.
(c)
To determine
Illustrate graphically when the fiscal policy partly eliminates a recessionary gap.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
What is fiscal imbalance?
Fiscal imbalance is the _______ value of the government's commitments to pay benefits minus the _______ value of its tax revenues.
A.
future; future
B.
future; present
C.
present; future
D.
present; present
Which of the following is NOT a problem associated with implementing fiscal policy.
a. Policy lags
b. Information lags
c. Interest rate lags
Od. Impact lags
Our macroeconomic model suggests that after a decline in aggregate demand like that of 2007, the economy will self correct and return to a position where the GDP gap is zero. If this is correct, why should the government ever intervene with fiscal policy?
a.
It take many years for the GDP gap to close on its own.
b.
This is part of the government's "mission statement" as given in the Constitution.
c.
Fiscal policy is profitable for banks.
d.
People do not trust the theory behind the model.
Chapter 11 Solutions
Macroeconomics (Book Only)
Ch. 11.1 - Prob. 1STCh. 11.1 - Prob. 2STCh. 11.1 - Prob. 3STCh. 11.1 - Prob. 4STCh. 11.3 - Prob. 1STCh. 11.3 - Prob. 2STCh. 11.3 - Prob. 3STCh. 11.4 - Prob. 1STCh. 11.4 - Prob. 2STCh. 11 - Prob. 1VQP
Ch. 11 - Prob. 2VQPCh. 11 - Prob. 3VQPCh. 11 - Prob. 4VQPCh. 11 - Prob. 5VQPCh. 11 - Prob. 1QPCh. 11 - Prob. 2QPCh. 11 - Prob. 3QPCh. 11 - Prob. 4QPCh. 11 - Prob. 5QPCh. 11 - Prob. 6QPCh. 11 - Prob. 7QPCh. 11 - Prob. 8QPCh. 11 - Prob. 9QPCh. 11 - Prob. 10QPCh. 11 - Prob. 11QPCh. 11 - Prob. 12QPCh. 11 - Prob. 13QPCh. 11 - Prob. 14QPCh. 11 - Prob. 15QPCh. 11 - Prob. 16QPCh. 11 - Prob. 17QPCh. 11 - Prob. 18QPCh. 11 - Prob. 19QPCh. 11 - Prob. 20QPCh. 11 - Prob. 21QPCh. 11 - Prob. 22QPCh. 11 - Prob. 23QPCh. 11 - Prob. 24QPCh. 11 - Prob. 1WNGCh. 11 - Prob. 2WNGCh. 11 - Prob. 3WNGCh. 11 - Prob. 4WNGCh. 11 - Prob. 5WNGCh. 11 - Prob. 6WNGCh. 11 - Prob. 7WNGCh. 11 - Prob. 8WNG
Knowledge Booster
Similar questions
- 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 policyarrow_forwardThe task I am struggling with: The accompanying diagram shows the current macroeconomic situation for the economy of Albernia. You have been hired as an economic consultant to help the economy move to potential output Yp. a) Is Albernia facing a recessionary or inflaniotary gap? b) Which type of fiscal policy – expansionary or contractionary – would move the economy of Albernia to potential output Yp? What are some examples of such policies? c) Illustrate the macroeconomic situation in Albernia with a diagram after the succesful fiscal policy has been implemented. Thank you very much for your help.arrow_forwardAn increase in Medicaid expenditure brought about by a flu epidemic is. Decreased expenditures on national defense during peace time is _. A. automatic fiscal policy action; automatic fiscal policy action B. automatic fiscal policy action; discretionary fiscal policy action C. discretionary fiscal policy action; automatic fiscal policy action D. not fiscal policy action because it is expenditure based an event that the government cannot influence; not fiscal policy action because national defense is necessary;arrow_forward
- Identify one fiscal policy action that could counter the increase in investments. Explain how this policy will affect each of the following.i. Output ii. The price level iii. Nominal interest ratesarrow_forwardWhich of the following is carried out in an expansionary fiscal policy? a. Higher taxes and higher government expenditure b. Lower taxes and higher government expenditure c. Higher taxes and lower government expenditure d. Lower taxes and lower government expenditure.arrow_forwardWhich of the following illustrates the effectiveness lag? A.Policymakers implement contractionary fiscal policy but it will be a few months before it starts working. B.Policymakers believe an economic downturn has occurred, but they decide not to take action until they are sure. C.Policymakers first learn of the recession when it is five months old. D.Policymakers agree to increase taxes, but it will be at least two months before the policy is implemented.arrow_forward
- Which of the following is an example of fiscal policy? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Electing a new member of Congress. Changing G or changing T. C Increasing the amount of money in circulation. d Charging a higher interest rate on mortgages.arrow_forwardYou are the Secretary of the Treasury, working with the president to implement appropriate policies. Currently, actual GDP is below potential output and falling. To stabilize the economy, you'd recommend fiscal policy, which could include a. expansionary; increased government purchases and tax cuts b. expansionary; decreased government purchases and a tax increase c. contractionary; increased government purchases and tax cuts d. contractionary; decreased government purchases and a tax increasearrow_forward1.Which of the following is an example of fiscal policy? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a A change in taxes b A change in the money supply c A change in the interest rate d A change in the price levelarrow_forward
- Fiscal policy is conducted by the government and aims at boosting the economy; which of the following is an example of expansionary fiscal policy? a. Increasing government spending while holding taxes constant. b. Increasing taxes while holding government spending constant. c. Increasing taxes and increasing government spending by the same amount. d. Decreasing taxes and decreasing government spending by the same amount.arrow_forwardQuestion: Which of the following is an example of a fiscal policy that has no inside lag? a- A reduction in interest rates. b- A reduction in the age at which people become eligible for retirement benefits. c. An ongoing unemployment insurance program. d. A decrease in income tax rates. e. An increase in goverment spending for job trainingarrow_forwardWhich of the following is considered contractionary fiscal policy? A) Congress decreases the income tax rate. B) Congress decreases defense spending. C) Legislation removes a college tuition deduction from federal income taxes. D) The New Jersey legislature cuts highway spending to balance its budget.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc