Economics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280595
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 28.B, Problem 3TY
a)
To determine
The equilibrium GDP and the budget deficit.
b)
To determine
The effect of a cut in government spending on GDP and budget deficit.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
In 10+ sentences, explain how we can eliminate the national debt using fiscal policy. Explain
how we could change taxes and/or spending in order to balance the budget. Be specific on who
you raise taxes on and where you cut spending. Make sure that you explain why you are
making these changes to our fiscal policy. Also, discuss how these contractionary policies will
impact our economy.
If you were the Prime Minister of Malaysia, what would you do to reduce the fiscal deficit of the country? Explain in detail.
Answer the following questions: As you know, the US government has been running budget deficits for several years now. In your opinion, and based on economic reasoning, what will happen to the US economy if the US Federal Government continues to run annual budget deficits for the next decade. Will the economy survive that? Will the economy grow? Will it grow as fast as it could? Will the deficits cause the economy to grow faster? Will it grow at all? These are some of the questions you might address in your primary post.
Chapter 28 Solutions
Economics: Principles and Policy (MindTap Course List)
Knowledge Booster
Similar questions
- In which of the following cases does the size of the government’s debt and deficit indicate potential problems for the economy? Explain your answer. a) The government’s debt is relatively low, but the government is running a large budget deficit as it builds a high-speed rail system to connect the major cities of the nation. b) The government’s debt is relatively high due to a recently ended deficit-financed war, but the government is now running only a small budget deficit. c) The government’s debt is relatively low, but the government is running a budget deficit to finance the interest payments on the debt. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardIf tax cuts don't cause enough economic growth, we might also need to reduce expenditures to reduce the deficit. Explain?arrow_forwardTo eliminate the deficit (and halt the growth of the net public debt), a politician suggests that “we should tax the rich.” The politician makes a simple arithmetic calculation in which he applies a higher tax rate to the total income reported by “the rich” in a previous year. He says that the government could thereby solve the deficit problem by taxing “the rich.” What is the major fallacy in such a claim?arrow_forward
- The use of government spending and taxation to affect aggregate demand are examples of fiscal policy. Explain how fiscal policy influences the economic growth of a country?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_forwardthe new equilibrium level of real GDP if government spending increases by $150? 18. What is the new equilibrium level of real GDP if government spending and taxes both increase by $150? 19. Make a graph showing the spending and tax revenue of your state government for as many years as you can find (use the government of your home country if you are not from the United States). What trends do you notice? What spending categories make up the largest share of the state budget? What are the largest sources of revenue?arrow_forward
- Budget deficit is defined as the difference between government spending and tax revenues. As President Clinton once stated, dealing with the budget deficit is simple "arithmetic". We need to cut government spending and increase tax revenues to lower the deficit. 1. If you are one of the policy makers determined to control the federal budget, which federal spending item(s) would you cut? 2. How would you change the tax policy to increase the tax revenue? Would you increase the income tax rate or decrease it to increase revenue (review the Laffer curve and comment on the relationship between the tax rate and and tax revenue)? How would you change the payroll tax? Who should have the burden of tax? Please review the 2018 Trump tax law and Biden administrations tax proposals. Below are two short videos: One supports the tax cuts, the other opposes. Tax cuts will spark growth and employment (Laffer) Six things we'll regret about Trump tax cuts 3. What is the impact of Covid-19 on the budget…arrow_forwardWhat is likely to happen to a country's budget deficit if the government increases spending without raising taxes during a period of economic stagnation? A. The budget deficit will decrease because government spending will stimulate economic growth. B. The budget deficit will increase because government spending exceeds tax revenue. C. The budget deficit will remain unchanged because the increase in government spending is offset by increased tax revenue from stimulated economic activity. D. The budget deficit will turn into a budget surplus because increased government spending always leads to higher tax revenues in the long run.arrow_forwardDefine the budget deficit.arrow_forward
- Complete the following sentence. As it relates to fiscal policy, a budget deficit exists when:Choose one answer.a. the government receipts are greater than its expenditures. b. the government expenditures are greater than its receipts. c. the government expenditures are equal to its receipts. d. the national debt is less than the yearly revenue.arrow_forwardIf you were given the chance to make your own 2021 National Budget Plan, which of the executive departments of the Philippines would get the lion's share of the budget? (Note: Please choose the Department of Health since we are in the middle of the pandemic.) GUIDE QUESTIONS Why did you choose that particular department to receive the lion's share of the budget? Explain briefly. What are the projects and programs that should be implemented? Are these revenue expenditures or capital expenditures? Explain. How would be these projects implemented? Are these for the long-term and on a by-phase basis? Where would be the location of the projects? Rural areas and/or urban areas? How long do you see the department getting the lion's share? Justify the forecast. References:https://dbm.gov.ph/images/pdffiles/201229-2021-Budget-at-a-Glance.pdfhttps://www.dbm.gov.ph/wp-content/uploads/BESF/BESF2009/I2.pdfThank you!arrow_forwardThe imaginary country of Acordia lists the following projected revenues and outlays for 2020: $30 million in personal income tax, $20 million in corporate income tax, $7 million in indirect taxes, $2 million in investment income, $35 million in transfer payments, $14 million in government expenditures, and $4 million in debt interest. What is the projected budget surplus (or deficit) for 2021? Calculate the amount and indicate whether it is a surplus or deficit.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning