Macroeconomics
13th Edition
ISBN: 9780134744452
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 13, Problem 21APA
(a)
To determine
Explain the discretionary and automatic fiscal policy.
(b)
To determine
Explain the discretionary fiscal policy and the negative supply effects.
(c)
To determine
Explain the risks of discretionary fiscal policy.
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Students have asked these similar questions
Is discretionary fiscal policy difficult to conduct when the economy is in recession?
A.
No, potential GDP is known and economic models can determine the discretionary stimulus.
B.
Yes, because Congress takes time to act, so the law-making time lag occurs.
C.
Yes, automatic fiscal policy, which operates in tandem with discretionary fiscal policy, is not always effective.
D.
No, the size of the multiplier is known, so it is easy to determine the fiscal stimulus needed.
Determine whether the following represent an example of discretionary fiscal policy or an automatic stabilizer, or
neither:
A. As the recession and unemployment worsen in Singsville, the average tax rate paid by households falls
B. The goverment of Singsville reduces spending on the military to slow down economic activity
C. The central bank of Singsville cuts bank fees
2 1. Discretionary fiscal policy
22. Automatic stabilizer
? 3. Neither
Chapter 13 Solutions
Macroeconomics
Ch. 13.1 - Prob. 1RQCh. 13.1 - Prob. 2RQCh. 13.1 - Prob. 3RQCh. 13.1 - Prob. 4RQCh. 13.1 - Prob. 5RQCh. 13.2 - Prob. 1RQCh. 13.2 - Prob. 2RQCh. 13.2 - Prob. 3RQCh. 13.2 - Prob. 4RQCh. 13.2 - Prob. 5RQ
Ch. 13.3 - Prob. 1RQCh. 13.3 - Prob. 2RQCh. 13.3 - Prob. 3RQCh. 13.3 - Prob. 4RQCh. 13.3 - Prob. 5RQCh. 13.4 - Prob. 1RQCh. 13.4 - Prob. 2RQCh. 13.4 - Prob. 3RQCh. 13.4 - Prob. 4RQCh. 13.4 - Prob. 5RQCh. 13 - Prob. 1SPACh. 13 - Prob. 2SPACh. 13 - Prob. 3SPACh. 13 - Prob. 4SPACh. 13 - Prob. 5SPACh. 13 - Prob. 6SPACh. 13 - Prob. 7SPACh. 13 - Prob. 8SPACh. 13 - Prob. 9SPACh. 13 - Prob. 10SPACh. 13 - Prob. 11SPACh. 13 - Prob. 12APACh. 13 - Prob. 13APACh. 13 - Prob. 14APACh. 13 - Prob. 15APACh. 13 - Prob. 16APACh. 13 - Prob. 17APACh. 13 - Prob. 18APACh. 13 - Prob. 19APACh. 13 - Prob. 20APACh. 13 - Prob. 21APACh. 13 - Prob. 22APACh. 13 - Prob. 23APACh. 13 - Prob. 24APACh. 13 - Prob. 25APACh. 13 - Prob. 26APACh. 13 - Prob. 27APACh. 13 - Prob. 28APA
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Similar questions
- 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_forwardSpecify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below and sketch a diagram using aggregate demand and aggregate supply curves to illustrate your answer: A recession. A stock market collapse that hurts consumer and business confidence. Extremely rapid growth of exports. Rising inflation. A rise in the natural rate of unemployment. A rise in oil prices.arrow_forwardWhat is the difference between discretionary fiscal policy and automatic stabilizers?arrow_forward
- Under what general macroeconomic circumstances might a government use expansionary fiscal policy? When might it use contractionary fiscal policy?arrow_forwardWhy is spending by the U.S. government on scientific research at NASA fiscal policy while spending by the University of Illinois is not fiscal policy? Why is a cut in the payroll tax fiscal policy whereas a cut in a state income tax is not fiscal policy?arrow_forward
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