Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 33, Problem 8DQ
a)
To determine
Arguments for engaging in expansionary monetary or fiscal policies under the given circumstances.
b)
To determine
Arguments for engaging in contractionary monetary or fiscal policies under the given circumstances.
c)
To determine
More persuasive argument among the two.
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Students have asked these similar questions
44)Which of the following statements is most accurate regarding fiscal policy and monetary policy?
Select one:
a. Monetary policy can be changed more quickly than fiscal policy. Fiscal policy can be changed at any of the FOMC meetings and the smaller number of individuals involved makes it easier to change fiscal policy.
b. Fiscal policy can be changed more quickly than monetary policy. Fiscal policy has much shorter delays due to the smaller number of legislators involved.
c. Monetary policy can be changed more quickly than fiscal policy. Monetary policy can be changed at any of the FOMC meetings and the smaller number of individuals involved makes it easier to change monetary policy.
d. Fiscal policy can be changed more quickly than monetary policy. Monetary policy has much longer delays due to the larger number of legislators involved.
1. What is a minor but important change you would like to see applied to fiscal policy?
2. What is a minor but important change you would like to see applied to monetary policy?
How would I do d?
Chapter 33 Solutions
Economics: Principles & Policy
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Similar questions
- The economy is experiencing rapid inflation, pushing above 9%. Which fiscal policy action should the government implement in an attempt to fix this problem? A.) decrease interest rates B.) raise taxes C.) increase spending D.) increase reserve requirementsarrow_forwardHow would I do a and b?arrow_forwardWhich organisation controls fiscal policy in Australia? Select one: a. The Reserve Bank of Australia O b. The National Cabinet O. The State Governments O d. The Federal Reserve e. The Federal Governmentarrow_forward
- 55)If the real GDP and Price level both decreased, the following must have occurred: Select one: a. Expansionary fiscal policy b. Contractionary fiscal policy c. Increase in capital d. Increase in labor supply e. None of the abovearrow_forwarda. What are the fiscal policy tools the government can use to expand an economy that is in a recession? Explain the interaction between monetary and fiscal policy?b. Explain how monetary policy is expected to affect investment and aggregate expenditure and discuss its connection with interest rates and output?arrow_forward1. Suppose the economy has fallen into a recession (output level ?0), and the federal government wants to return the economy to its original level of output (?). Respond to each of the following questions using appropriate diagrams and explanations.(a) If policy makers can only use fiscal tools, what should they do?(b) If policy makers can only use monetary tools, what should they do? (c) What should they do if they want to return output to its original level but keep investment from changing?arrow_forward
- Assume that Country D is in a recession. 1. What fiscal policy actions would combat the recession? 2. What monetary policy actions would combat the recession? 3. Could the fiscal policy or monetary policy in this case cause crowding out?arrow_forwardBudget 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_forward1. a) Explain what crowding out is and why it reduces the impact of fiscal stimulus. b) True or false and explain: The national debt represents a threat of bankruptcy. c) What is barter and why is it inefficient?arrow_forward
- 10. Describe the characteristics of fiscal policy from 2000 to 2018. a. From 2000 to 2004, fiscal policy was (expansionary, contractionary ). The cyclically adjusted budget was 1.1 percent in 2000 and moved to -3.2 percent in 2004. b. From 2004 to 2007, the fiscal policy turned ( expansionary, contractionary ) as the cyclically adjusted deficit fell from –3.2 percent of GDP to -1.2 percent of GDP. c. During the Great Recession From 2007 to 2009, fiscal policy was (expansionary, contractionary ). The cyclically adjusted budget was -1.2 percent in 2007 and moved to -7.3 percent in 2009. Note: In 2008, the U.S. Congress passed an (_e increase government spending. The $152 billion in spending came in the form of tax breaks for businesses and payments to individuals. This initial stimulus ( did, did not) have much effect because households saved a substantial portion of their government payments. In 2009 a significantly larger spending stimulus measure, called the American Recovery and…arrow_forward2.When an economy has an aggregate expenditure of $150 billion and the real GDP of $140 billion, then households bought fewer new homes than they anticipated. Select one:True or False 3. Even though both fiscal and monetary policies experience time lags, there are long time lags associated with the legislative process in implementing a fiscal policy which makes it more difficult to use than monetary policy. Select one:True or False 4.In an open economy, like Australia, fiscal policies are more effective than monetary policies when reducing the business cycle fluctuations. Select one: True or False 5.Technological change will shift up the per-worker production function and enable countries to have sustained economic growth. Select one:True or False Ans all.. otherwise don't ansarrow_forward14) During a period when economic growth is very strong and inflation rates are rising to uncomfortable levels, Federal Reserve policymakers might decide to pursue which type of monetary policy? 15) Which of the following pairs of terms is used to describe fluctuations in the economy? 16) During a contractionary phase of the business cycle which of the following most likely occurs? 17) Which of the following regulations prevent price gouging? 18) what does fiscal policy include?arrow_forward
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