Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 18, Problem 4QP
To determine
Acceptability of the statement.
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Should the United States government attempt to operate under a balanced budget? Why, or why not?
Which of the following is NOT a category of fiscal policy?
Government policies regarding the purchase of goods and
services
Government policies regarding taxation
Government policies regarding transfer payments and
welfare benefits
Government policies regarding money supply in the economy
Which system of taxes is best? Why does that system is the most effective way for the government to generate revenue and maintain our economy's growth?
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- This course is designed to provide an understanding of market economies and the fluctuations they are subject to. With this in mind, please answer the questions that follow. a) Assume the economy is in a recession. Discuss how the government could implement fiscal policy to deal with the recession and the steps by which fiscal policy moves the economy out of the recession (Explain fully). b) Explain how expansionary fiscal policy in the U.S. would affect the economies of other countries.arrow_forwardWhen the economy is in recession, government revenue falls due to a falling tax base. Therefore the proper role of government should be to increase taxes and cut spending so as to balance the Federal budget. Do you agree? Why?arrow_forwardDescribe some fiscal policies that governments are presently using to counter the impact of coronavirus on an economy. Discuss if these policies are more, or less likely, to deliver long-term social equity. Could these policies be used to create more social security/welfare; discuss and compare any negative consequences that these policies could have on an economy and critique the various ways the government could minimise or remove such negative consequences?arrow_forward
- If government increases spending and wants to maintain a balanced budget, it shouldarrow_forwardYou are given data on the following variables in an economy: Government spending 300, Total Investment 200, Net Exports 50, Total Tax Revenue 250, Income tax rate 10%. How much income should been arned by the businesses and the individuals in order for the government to reach a balanced budget?arrow_forwardWhat are monetary, fiscal and growth and supply side policies. How can a government utilize fiscal policy to stimulate an economy that is in a recession, or in a debt crisis? In your answer outline two (2) challenges the government may face implementing a fiscal policy measure.arrow_forward
- Why does the budget require a forecast of the economy? Under what circumstances would actual government spending and tax revenue fail to match the budget as approved? kindly explain answers in a simpler way.arrow_forwardDuring an economic _______, there is a decline in economic activity, including falling GDP, rising unemployment, and reduced consumer spending. To combat this, governments often implement _______ fiscal policies to stimulate the economy. A) expansion, contractionaryB) downturn, expansionaryC) boom, contractionaryD) recession, expansionary.arrow_forwardWhich of the following best describes a fiscal policy tool? 1. Government spending II. Government taxes III. Interest rates. IV. Bank lending V. Financial capital markets I and II I and VI III, IV, and Varrow_forward
- Which of the following statements do economists generally disagree on? a) At an average tax rate of 50%, tax revenues are maximized for a government. b) No tax revenues would be collected when average tax rates are 100%. c) At very high average tax rates, increasing tax rates further would decrease tax revenues. d) No tax revenues would be collected when average tax rates are 0%.arrow_forward1. Government expenditures in the United States The first table that follows shows government expenditures as a percentage of GDP for selected years. For the same years, the first table also shows different categories of federal expenditures as percentages of total federal government expenditures. The second table shows government tax revenue as a percentage of GDP for the selected years. The second table also shows different categories of federal tax receipts as percentages of total federal tax receipts. (Source: "U.S. Government Printing Office.") Government Expenditures (GDP %) State and Local 7% 10% 14% Year 1950 1970 2011 Federal 16% 19% 24% Government Tax Receipts (GDP %) State and Year 1950 1970 2011 Federal 14% 19% 15% Local 7% 10% *Including transportation, agriculture, veterans' benefits, international affairs, housing, and so on. 14% Income Security 13% 22% 50% Expenditures as a Share of the Federal Government Budget Education Net Interest on and Health Federal Debt…arrow_forwardMULTIPLE CHOICE QUESTIONS1. Which of the following is a category of fiscal policy?A) government policies regarding transfer payments and welfare benefitsB) government policies regarding the purchase of goods and servicesC) government policies regarding taxationD) all of the above2. Which of the following is CORRECT regarding tax revenues?A) they do not change with changes in the tax rateB) they increase during recessionsC) they are the only revenue source in the government's budgetD) they decrease during economic slowdowns3. Disposable incomeA) decreases when income decreases.B) decreases when net taxes decrease.C) increases when saving decreases.D) all of the above4. Planned aggregate expenditure increases when ________ in the income-expenditure model.A) the government sector is excludedB) consumption is excludedC) the government sector is includedD) investment is excluded5. If output is greater than planned aggregate expenditure, there will beA) no change in inventories.B) a planned…arrow_forward
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