Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 12, Problem 4CQ
To determine
The impact of tax rebate in the rate of interest,
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Expansionary fiscal policy refers to (increases, decreases) in government spending or
(increases, decreases) in taxes or both, so that the net effect on aggregate demand (AD) is an increase
in net government spending (G).
Contractionary fiscal policy is the opposite: a(n) (increase, decrease) in government spending
or (increase, decrease) in taxes or both, so that the net effect on aggregate demand is a decrease in net
government spending.
Expansionary policy would most likely be used during a r
A contractionary policy would most likely be employed near the (peak, trough ) of the business
cycle as the economy reaches full-employment GDP and the potential for inflation accelerates.
or (peak, trough ) phase.
Consider a potential fiscal policy used to curb a recession. How could a consumer and business expectations about the future economy could hamper those plans?
Right now many economies in the world are experiencing a downturn due to the Corona Virus.a) What kind of fiscal policy can governments use to address the decline? b) What actions will be taken by the government in implementing the fiscal policy that you described in part a? c) What will be the effect on Aggregate Demand (if any) as a result of the actions taken in part b?d) What will be the effect on Aggregate Supply (if any) as a result of the actions taken in part b?
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Economics: Private and Public Choice (MindTap Course List)
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