(a) To find: The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

Question

Outline the supply-side view of fiscal policy. How does this view differ from the various demand-side theories? Would a supply-side economist be more likely to favor a $500 tax credit or an equivalent reduction in marginal tax rates? Why?

Answer 1

Question

Chapter 16, Problem 5P

To determine

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

To determine

(b)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(c)

To explain:

The result in long-term if no fiscal policy is applied.

To determine

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

To determine

(e)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(f)

To explain:

The result in long-term if no fiscal policy is applied.

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Outline the supply-side view of fiscal policy. How does this view differ from the various demand-side theories? Would a supply-side economist be more likely to favor a $500 tax credit or an equivalent reduction in marginal tax rates? Why?

Suppose the economy begins at full employment. Label this starting point as point "1." Then, suppose that a long strike by coal miners reduces the coal supply and increases the price of coal. Show the effects on your graph and label the new equilibrium point "2." Lastly, suppose our government wants the economy to return to full-employment as quickly as possible. Should the government intervene? If so, show the impact of successful fiscal policy on your graph. Label this new equilibrium point "3."

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?

Answer 2

Question

Chapter 16, Problem 5P

To determine

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

To determine

(b)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(c)

To explain:

The result in long-term if no fiscal policy is applied.

To determine

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

To determine

(e)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(f)

To explain:

The result in long-term if no fiscal policy is applied.

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Answer 3

Question

Chapter 16, Problem 5P

To determine

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

To determine

(b)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(c)

To explain:

The result in long-term if no fiscal policy is applied.

To determine

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

To determine

(e)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(f)

To explain:

The result in long-term if no fiscal policy is applied.

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Answer 4

Question

Chapter 16, Problem 5P

To determine

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

To determine

(b)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(c)

To explain:

The result in long-term if no fiscal policy is applied.

To determine

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

To determine

(e)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(f)

To explain:

The result in long-term if no fiscal policy is applied.

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Answer 5

Chapter 16, Problem 5P

To determine

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

To determine

(b)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(c)

To explain:

The result in long-term if no fiscal policy is applied.

To determine

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

To determine

(e)

To explain:

The result of applying an appropriate fiscal policy.

To determine

(f)

To explain:

The result in long-term if no fiscal policy is applied.

Answer 6

Chapter 16, Problem 5P

To determine

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

Answer 7

Chapter 16, Problem 5P

To determine

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

Answer 8

To determine

(b)

To explain:

The result of applying an appropriate fiscal policy.

Answer 9

To determine

(b)

To explain:

The result of applying an appropriate fiscal policy.

Answer 10

To determine

(c)

To explain:

The result in long-term if no fiscal policy is applied.

Answer 11

To determine

(c)

To explain:

The result in long-term if no fiscal policy is applied.

Answer 12

To determine

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

Answer 13

To determine

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

Answer 14

To determine

(e)

To explain:

The result of applying an appropriate fiscal policy.

Answer 15

To determine

(e)

To explain:

The result of applying an appropriate fiscal policy.

Answer 16

To determine

(f)

To explain:

The result in long-term if no fiscal policy is applied.

Answer 17

To determine

(f)

To explain:

The result in long-term if no fiscal policy is applied.

Answer 18

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Ch. 16 - Prob. 1P Ch. 16 - Prob. 2P Ch. 16 - Prob. 3P Ch. 16 - Prob. 4P Ch. 16 - Prob. 5P Ch. 16 - Prob. 6P Ch. 16 - Prob. 7P Ch. 16 - Prob. 8P Ch. 16 - Prob. 9P Ch. 16 - Prob. 10P

(a) To find: The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

Solution Summary: The author explains the short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

(b)

To explain:

The result of applying an appropriate fiscal policy.

(c)

To explain:

The result in long-term if no fiscal policy is applied.

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

(e)

To explain:

The result of applying an appropriate fiscal policy.

(f)

To explain:

The result in long-term if no fiscal policy is applied.

Chapter 16 Solutions

(a) To find: The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

Solution Summary: The author explains the short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

(a) To find: The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

(b) To explain: The result of applying an appropriate fiscal policy.

(c) To explain: The result in long-term if no fiscal policy is applied.

(d) To find: The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

(e) To explain: The result of applying an appropriate fiscal policy.

(f) To explain: The result in long-term if no fiscal policy is applied.

Chapter 16 Solutions

(a)

To find:

The short-run equilibrium point at which the economy can be stabilized using expansionary fiscal policy.

(b)

To explain:

The result of applying an appropriate fiscal policy.

(c)

To explain:

The result in long-term if no fiscal policy is applied.

(d)

To find:

The short-run equilibrium point at which the economy can be stabilized using contractionary fiscal policy.

(e)

To explain:

The result of applying an appropriate fiscal policy.

(f)

To explain:

The result in long-term if no fiscal policy is applied.