Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 24, Problem 1.4P
To determine
How war ends recession and the federal government’s debt as a percentage of
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Some economists claim World War II ended the Great Depression of the 1930s. The war effort was financed by borrowing massive sums of money from the public. Explain how a war could end a recession. Look at recent and back issues of the Economic Report of the President or the Statistical Abstract of the United States. How large was the federal government’s debt as a percentage of GDP in 1946? How large is it today?
How was the recession in 2020 different than the recession in 2008? What was the government response in 2008 vs. 2020? How much was spent on stimulus in 2008 vs. 2020 (be sure you are looking at inflation-adjusted numbers)? Compare and contrast some of the major stimulus programs put in place in 2008 and in 2020. Was the government more successful in 2008 or 2020? Why
What effect did the economic program have on the federal deficit?
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Principles of Economics (12th Edition)
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- Refer to the News Wire to answer three questions. NEWS WIRE: FISCAL STIMULUS: TAX CUTS Trump Tax Cuts Boost Spending The Tax Cuts and Jobs Act of 2017 seems to be working. Although the lion's share of President Trump's tax cuts went to business, consumers got a tax break as well. For the average U.S. household, the tax cut amounts to roughly $40 a week in take-home pay. That may not sound like much, but with 130 million households, that extra income can pack some punch. According to the National Retail Federation, consumer spending was up 4.8 percent in the first six months of this year. And the government reports that GDP grew by 4.2 percent in the second quarter, the best performance since 2014. There may be other factors at work here, but tax-cut fueled consumer spending is certainly a big contributor. Source: News accounts of September–October 2018. Instructions: In part a, enter your response as a whole number. In parts b and c, round your responses to one decimal…arrow_forwardEvaluate the effectiveness of fiscal policy as a tool to reduce unemployment.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
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