Assume the government makes no fiscal policy changes when the economy experiences a downturn. Which outcome would be expected? O Government expenditure to be higher and tax revenues to be lower, probably leading to a budget deficit. O Government expenditure to be lower and tax revenues to be lower, probably leading to a budget surplus. O Government expenditure to be higher and tax revenues to remain the same, probably leading to a budget deficit. O Government expenditure to be higher and tax revenues to be lower, probably leading to a budget surplus. Government expenditure to remain the same and tax revenues to be lower, probably leading to a budget deficit.

Assume the government makes no fiscal policy changes when the economy experiences a downturn. Which outcome would be expected? O Government expenditure to be higher and tax revenues to be lower, probably leading to a budget deficit. O Government expenditure to be lower and tax revenues to be lower, probably leading to a budget surplus. O Government expenditure to be higher and tax revenues to remain the same, probably leading to a budget deficit. O Government expenditure to be higher and tax revenues to be lower, probably leading to a budget surplus. Government expenditure to remain the same and tax revenues to be lower, probably leading to a budget deficit.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 2.9P

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Similar questions

Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending by the University of Illinois is not fiscal policy? Why is a cut in the payroll tax fiscal policy whereas a cut in a state income tax is not fiscal policy?
Explain how automatic stabilizers work, both on the taxation side and on the spending side, first in a situation where the economy is producing less than potential GDP and then in a situation where the economy Is producing more than potential GDP.
When governments run budget surpluses, what is done with the extra funds?
Which of the following is carried out in an expansionary fiscal policy? O a. Higher taxes and lower government expenditure O b. Lower taxes and higher government expenditure O c. Higher taxes and higher government expenditure O d. Lower taxes and lower government expenditure.
Quèstion 14 Which of the following fiscal policy changes would be the most contractionary? O A. a $10 billion increase in taxes and a $30 billion cut in government spending. O B. a $40 billion increase in taxes. O C, a $30 billion increase in taxes and a $10 billion cut in government spending. Opa $20 billion increase in taxes and a $20 billion cut in government spending.
Question 4 functions as an automatic fiscal stabilizer because it increases when the economy is in a recession and decreases when the economy is in a recovery or boom. O Real GDP Nominal GDP O Unemployment insurance O Inflation
The larger the amount of outstanding national debt: the lower the tax revenue the government must collect. the smaller the crowding out of private investment spending. O the more spending the government can afford. the larger the fraction of the federal budget that must be devoted to interest payments.
Assume that the economy is in a recession and the government is experiencing a budget deficit. What happens if balanced-budget fiscal policy is used to eliminate the deficit? O a. Unemployment will fall. O b. GDP will rise. O c. The deficit could be eliminated if GDP rose. d. Government spending will fall. P NTR will remain unchanged.
Suppose the equilibrium level of income exceeds the full employment level of income and there is high inflation. Hence, the government decides to implement a fiscal policy that will act to reduce national output and prices. This can be accomplished by: O increasing government spending such that aggregate expenditures are increased. O raising taxes and government spending by the same amount such that aggregate supply is decreased and aggregate demand is increased. O decreasing government spending such that aggregate demand is reduced. lowering average tax rates such that aggregate supply is increased. O increasing transfer payments such that aggregate expenditures decline.
net taxes Government spending/ NTR G₁ G₂ Уг у Real GDP Refer to the figure above to answer this question. For any real GDP less than Y2, the government budget would be: O a. Balanced for both Y1 and Y2. O b. In a deficit for both G1 and G2. Oc. In a surplus for both G1 and G2. O d. Balanced for G2, but in a deficit for G1.
A Moving to another question will save this response. Question 23 Fiscal policy can move us to equilibrium at Full Employment by O a. these are all possible fiscal policies to bring us to full employment. O b. bailing out troubled industries with special subsidies like the "paycheck protection" during the pandemic. O c. making changes in G, net government spending. O d. changing tax rates people have to pay. A Moving to another question will save this response. tab 1 Q ABA 2 W E R T
Contractionary fiscal policies do not necessarily decrease a country's debt-to-GDP ratio because O a. It decreases our GDP and our ability to pay the debt O b. It will appreciate our currency It increases the interest rates on outstanding debt O d. All of the answers are correct