Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 32, Problem 1IAPA
To determine
To explain:
The similarity and the differences between the experience of the Great Depression in 1933 with the fiscal policy which accompanied the 2008-2009 recession, and the steps taken in the fiscal policy to moderate the last recession that was largely absent during the Great Depression.
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Evaluate the effectiveness of fiscal policy as a tool to reduce unemployment.
Describe the shortcomings of Fiscal Policy. Be as thorough as possible.
Which 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
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Chapter 32 Solutions
Foundations of Economics (8th Edition)
Ch. 32 - Prob. 1SPPACh. 32 - Prob. 2SPPACh. 32 - Prob. 3SPPACh. 32 - Prob. 4SPPACh. 32 - Prob. 5SPPACh. 32 - Prob. 6SPPACh. 32 - Prob. 7SPPACh. 32 - Prob. 8SPPACh. 32 - Prob. 9SPPACh. 32 - Prob. 10SPPA
Ch. 32 - Prob. 1IAPACh. 32 - Prob. 2IAPACh. 32 - Prob. 3IAPACh. 32 - Prob. 4IAPACh. 32 - Prob. 5IAPACh. 32 - Prob. 6IAPACh. 32 - Prob. 7IAPACh. 32 - Prob. 8IAPACh. 32 - Prob. 9IAPACh. 32 - Prob. 10IAPACh. 32 - Prob. 11IAPACh. 32 - Prob. 1MCQCh. 32 - Prob. 2MCQCh. 32 - Prob. 3MCQCh. 32 - Prob. 4MCQCh. 32 - Prob. 5MCQCh. 32 - Prob. 6MCQCh. 32 - Prob. 7MCQCh. 32 - Prob. 8MCQ
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- Identify the effects of fiscal policy on the economyarrow_forwardFiscal policy is a plan for taxing and spending that is designed to steer an economy in a desired direction True Falsearrow_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
- The U.S. economy is over a decade removed from the Great Recession. For several years after the Great Recession officially ended, the U.S. grew at an historically slow rate. Analyze the causes of the slow increases in U.S. GDP. An analysis of the fiscal policy approach the Federal Government took to the recoveryarrow_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
- List what specific, deliberate actions the federal government could take to enact expansionary fiscal policy.arrow_forwardDefine fiscal policy and explain the role of income taxes and government spending as fiscal policy tools.arrow_forwardOne timing problem in using fiscal policy to counter a recession is the "legislative lag" that occurs between the start of the recession and the time it takes to recognize that the recession has started. start of a predicted recession and the actual start of the recession. time fiscal action is taken and the time that the action has its effect on the economy time the need for the fiscal action is recognized and the time that the action is taken.arrow_forward
- Which of the following statements about automatic stabilizers in Canada is the most accurate? They are the responsibility of the provinces since they, unlike the federal government, do not face lag problems. They are controlled by the Bank of Canada to help manage the business cycle. They are able to completely eliminate all the lag problems associated with fiscal policy. They are changes in government transfer payments and tax revenues that vary automatically and inversely to business cycle changes.arrow_forwardKey limitations to fiscal policies.arrow_forwardGokhale and Smetters (2003) found that the long-run fiscal imbalance in the U.S. government budget is caused A - by large discretionary expenditures. B - solely by entitlement programs for the elderly, largely Medicare. C - solely by entitlement programs for the elderly, largely Social Security. D - by government support programs for the poor.arrow_forward
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