Principles of Macroeconomics 2e
2nd Edition
ISBN: 9781947172388
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 17, Problem 53P
Specify 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
- 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.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
For each of the following fiscal policy proposals, determine whether the primary focus is on aggregate demand or aggregate supply or both:
i. $1,000 per person tax reduction
ii. a 5% reduction in all tax rates
iii. Pell Grants, which are government subsidies for college education
iv. government-sponsored prizes for new scientific discoveries
v. an increase in unemployment compensation
(i) both; (ii) supply-side; (iii) supply-side; (iv) both; (v) demand-side
(i) demand-side; (ii) both; (iii) supply-side; (iv) supply-side; (v) both
(i) demand-side; (ii) both; (iii) both; (iv) supply-side; (v) demand-side
(i) supply-side; (ii) demand-side; (iii) demand-side; (iv) both; (v) both
(i) supply-side; (ii) supply-side; (iii) demand-side; (iv) both; (v) both
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?
Evaluate the effectiveness of fiscal policy as a tool to reduce unemployment.
Chapter 17 Solutions
Principles of Macroeconomics 2e
Ch. 17 - When governments run budget deficits, how do they...Ch. 17 - When governments run budget surpluses, what is...Ch. 17 - Is it possible for a nation to run budget deficits...Ch. 17 - Suppose that gifts were taxed at a rate of 10 for...Ch. 17 - If an individual owns a corporation for which he...Ch. 17 - What taxes would an individual pay if he were...Ch. 17 - The social security tax is 6.2 on employees income...Ch. 17 - Debt has a certain self-reinforcing quality to it....Ch. 17 - True or False: Federal spending has grown...Ch. 17 - What is the main reason for employing...
Ch. 17 - What is the main reason for employing expansionary...Ch. 17 - In a recession, does the actual budget surplus or...Ch. 17 - What is the main advantage of automatic...Ch. 17 - Explain how automatic stabilizers work, both on...Ch. 17 - What would happen if expansionary fiscal policy...Ch. 17 - What would happen if contractionary fiscal policy...Ch. 17 - Do you think the typical time lag for fiscal...Ch. 17 - How would a balanced budget amendment affect a...Ch. 17 - How would a balanced budget amendment change the...Ch. 17 - Give some examples of changes in federal spending...Ch. 17 - Have the spending and taxes of the U.S. federal...Ch. 17 - What are the main categories of U.S. federal...Ch. 17 - What is the difference between a budget deficit, a...Ch. 17 - Have spending and taxes by state and local...Ch. 17 - What are the main categories of U.S. federal...Ch. 17 - What is the difference between a progressive tax,...Ch. 17 - What has been the general pattern of U.S. budget...Ch. 17 - What is the difference between a budget deficit...Ch. 17 - What is the difference between expansionary fiscal...Ch. 17 - Under what general macroeconomic circumstances...Ch. 17 - What is the difference between discretionary...Ch. 17 - Why do automatic stabilizers function...Ch. 17 - What is the standardized employment budget?Ch. 17 - What are some practical weaknesses of...Ch. 17 - What are some of the arguments for and against a...Ch. 17 - Why is government spending typically measured as a...Ch. 17 - Why are expenditures such as crime prevention and...Ch. 17 - Why is spending by the U.S. government on...Ch. 17 - Excise taxes on tobacco and alcohol and state...Ch. 17 - What is the benefit of having state and local...Ch. 17 - In a booming economy, is the federal government...Ch. 17 - Economist Arthur Laffer famously pointed out that,...Ch. 17 - Is it possible for a nation to run budget deficits...Ch. 17 - How will cuts in state budget spending affect...Ch. 17 - Is expansionary fiscal policy more attractive to...Ch. 17 - Is Medicaid (federal government aid to low-income...Ch. 17 - What is a potential problem with a temporary tax...Ch. 17 - If the government gives a 300 tax cut to everyone...Ch. 17 - Do you agree or disagree with this statement: It...Ch. 17 - During the Great Recession of 20082009, what...Ch. 17 - A government starts off with a total debt of $3.5...Ch. 17 - If a government runs a budget deficit of 10...Ch. 17 - Specify whether expansionary or contractionary...
Additional Business Textbook Solutions
Find more solutions based on key concepts
What is the relationship between management by exception and variance analysis?
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
(Future and present value using a calculator) In 2016 Bill Gates was worth about $82 billion. Let’s see what Bi...
Foundations Of Finance
The value of one-year call option of HN stock. Introduction: Expected return is the method of finding the avera...
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
1.10 Brown’s, a local bakery, is worried about increased costs—particularly energy. Last year’s records can pro...
Operations Management
Why a convertible security not be converted when the market price of stock raises above the conversion price an...
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Trade Notes Payable. On November 1, Barcelona Sales, Inc. purchased inventory costing 589,000 using a 5-month t...
Intermediate Accounting (2nd Edition)
Knowledge Booster
Similar questions
- the impact of fiscal policy on the aggregate price level, unemployment and incomearrow_forwardDescribe the shortcomings of Fiscal Policy. Be as thorough as possible.arrow_forwardWhich of the following is a reason for using expansionary fiscal policy during a recession? a) reduce unemployment b) All of the choices are correct c) help the economy return to full employment d) help increase GDP, job opportunities, and production in the economy e) increase employmentarrow_forward
- Define fiscal policy and explain the role of income taxes and government spending as fiscal policy tools.arrow_forwardIdentify the effects of fiscal policy on the economyarrow_forwardIdentify one fiscal policy action that could counter the effects identified in part (a). Explain how this policy will affect each of the following. Output Employment The price levelarrow_forward
- Specify 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. A recession. b. A stock market collapse that hurts consumer and business confidence. c. Extremely rapid growth of exports. d. Rising inflation. e. A rise in the natural rate of unemployment. f. A rise in oil pricearrow_forwardLabel each of the following scenarios in which there are problems enacting and applying fiscal policy as being an example of either recognition lag, administrative lag, or operational lag. To fight a recession, Congress has passed a bill to increase infrastructure spending but the legally required environmental impact statement for each new project will take at least two years to complete before any building can begin. Distracted by a war that is going badly, politicians take no notice until inflation reaches 8 percent. A sudden recession is recognized by politicians, but it takes many months of political deal making before a stimulus bill is finally approved. To fight a recession, the president orders federal agencies to get rid of petty regulations that burden private businesses – but the federal agencies begin by spending a year developing a set of regulations on how to remove petty regulations.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning