Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 18, Problem 3QP
To determine
Acceptability of the statement.
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Which 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.
Why Krugman believe that fiscal austerity in france or more generally in Europe would fail?
Compare two fiscal policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and long-term impacts of such policies on the economy?
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- In preparing their estimates of the stimulus package's effect on GDP, Obama administration economists estimated a government purchases multiplier of 1.57. Economist Robert Barro argues that the government purchases multiplier would be lower than the administration's estimate, and economists Lawrence Christiano, Martin Eichenbaum, and Sergio Rebelo argued that the multiplier would be higher than the administration's estimate. when the unemployment rate is high; when the value of the dollar is depreciating against foreign currencies when the federal budget is in surplus; when government transfer payments are declining during wartime; when short-term interest rates are near zero during a recession; when the inflation rate is relatively lowarrow_forwardRight 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?arrow_forwardIf an increase in government spending is accompanied by a reduction in spending by firms and households, economists call this: a) Fiscal policy b) Crowding out c) The accelerator d) Hysteresisarrow_forward
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