pose aggregate demand is too high bring about the Natural Real GDP level. A Keynesian policy prescription would call for a(n) e this inflationary gap a, increase in government spending or decrease in taxes b. increase in government spending or taxes c decrease in government spending or increase in taxes d. decrease in government spending or taxes to

pose aggregate demand is too high bring about the Natural Real GDP level. A Keynesian policy prescription would call for a(n) e this inflationary gap a, increase in government spending or decrease in taxes b. increase in government spending or taxes c decrease in government spending or increase in taxes d. decrease in government spending or taxes to

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 2CQQ

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Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and longâ€”term impacts of such policies on the economy?
uèstion 21 pounts The economy is in a recession. The government enacts a policy to increase the real GDP by $10 billion. The MPS is 0.2. Assuming that the agggregate supply curve is horizontal across the range of GDP being considered, by how much should the government change spending or taxes in order to achieve its objective? Show your calculations. e For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 10pt A v x X, Re v 55 OWORDS POWERED 図田 lili 用

14. The economy is experiencing a $225 million inflationary gap. If the government 02 decided to solve this macroeconomic disequilibrium using a change in taxes, would you recommend an increase or decrease in taxes? If the MPC=0.9, what magnitude of tax change would be appropriate?
Equal increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded. a. True b. False
What would have a larger effect on aggregate demand: $150 billion of tax cuts or $150 billion of government expenditure? 1 try left Government expenditure would have a than the tax cuts because effect on aggregate demand A. smaller; tax cuts increase aggregate demand and government expenditure decreases aggregate supply OB. smaller; tax cuts increase aggregate demand and government expenditure decreases aggregate demand OC. larger; the tax cuts decrease aggregate expenditure while government expenditure increase aggregate demand D. larger; all government expenditure is spent while some of the tax cut is saved Search (3)
Which fiscal policy expects the economy to self-adjust? O balanced budget O counter-cyclical O business cycle O cyclically balanced ante changes to this answer
21. If taxes a. increase, then consumption increases, and aggregate demand shifts leftward. b. increase, then consumption decreases, and aggregate demand shifts rightward. c. decrease, then consumption increases, and aggregate demand shifts rightward. d. decrease, then consumption decreases, and aggregate demand shifts leftward.
2. Assume that there is an increase in taxes Which determinant? A AD or A AS? P LRAS SRAS P₁ AD What happens to: Price Level Real GDP Inflation Unemployment Economic Growth Y YF
Price Level p* a LRAS Y* AD Real GDP AS Tools Fiscal Action 0 a. How does the short-run equilibrium compare to the initial equilibrium? The price level has (Click to select) and output has [(Click to select) b. What is the primary concern of policy makers under these conditions? high unemployment O declining value of the dollar O high Inflation V c. What policy action might the government take in order to improve economic conditions? (Click to select) fiscal policy by [(Click to select) taxes and/or (Click to select)government purchases d. Use the graph above to depict the goal of the fiscal action discussed Instructions: Use the tool provided 'Fiscal Action' to show the result of the policy action taken by the government. Plot only the endpoints of the line (2 points total). Label your line appropriately. e. What is the desired final outcome after the fiscal policy action and multiplier effect have occurred? A price level [(Click to select) P* and an output level [(Click to select) Y*…
Exhibit 11-1 LEAS V SPAS AD Real GDP Refer to Exhibit 11-1. The economy is currently at point 1. In this situation, Keynesian economists would most likely propose O an increase in government purchases. O an increase in taxes. O a decrease in government purchases.
Suppose the economy is in recession. Policymakers estimate that aggregate demand is$100 billion short of the amount necessary to generate the long run natural rate of output.That is, if aggregate demand were shifted to the right by $100 billion, the economy wouldbe in long run equilibrium.a. Explain the impact on the economy if the government chooses to use fiscal policy tostabilize the economy and the marginal propensity to consume (MPC) is given as0.75 with no crowding out.
If taxes are lowered, we can expect supply-side economists to support the decision to do so because a. government revenues will increase in the long run. b. government spending will decrease in the long run. c. the government will spend more in the short run. d. economic growth cannot occur without it.