US President Collin Hawkins is concerned about the economy. He orders the Treasury to issue direct stimulus payments to citizens in an effort to prevent a recession. On average citizens save 20% of their income. The total of this stimulus amount is $1.3 trillion USD. What is the multiplier? What is the total economic impact of this injection? $ "instead of using 'O's, simply note the number using "m", "b", or "t" for 'million, "billion, or 'trillion.' For example if your answer is "$56,100,000,000", you should instead type "$56.1b"

US President Collin Hawkins is concerned about the economy. He orders the Treasury to issue direct stimulus payments to citizens in an effort to prevent a recession. On average citizens save 20% of their income. The total of this stimulus amount is $1.3 trillion USD. What is the multiplier? What is the total economic impact of this injection? $ "instead of using 'O's, simply note the number using "m", "b", or "t" for 'million, "billion, or 'trillion.' For example if your answer is "$56,100,000,000", you should instead type "$56.1b"

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 5P

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EXPANSIONARY FISCAL POLICY 20% GOVERNMENT SPENDING 80% TAKATION Gvemme Spnding Taationmater than pter than tation apud How will Expansionary Fiscal Policy affect the Federal Budget? A budget surplus will decrease the national debt Deficit spending will decrease the national debt Deficit spending will increase the national debt A budget surplus will increase the national debt
The graph below shows real GDP levels over time. Answer the following questions based on this groph. Real GDP T Business Cycle Time Y" a. At time T. what is the economy experiencing? O full-employment output an economic expansion an economic contraction b. In order to smooth out the business cycle, what type of fiscal policy should the government undertake? contractionary fiscal policy expansionary fiscal policy c. What type of actions might the government take? a decrease in taxes and an increase in government purchases a decrease in both taxes and govemment purchases an increase in taxes and a decrease in government purchases an increase in both taxes and government purchases
16) What is the first signal that policy makers may need to examine expansionary fiscal economic policy A. A decrease in AS B. A decrease in AD C. A decrease in LRSA D. An increase in AS
Imagine that a group of advisors to the president has suggested providing a tax cut for the middle class in order to stimulate the economy and reduce unemployment. The president has asked for your analysis of this proposed tax cut. Post your thoughts both as an economic scientist and economic policy advisor. Read the scenario and, respond to the following: Describe how an economic scientist would approach the tax cut recommended by the advisors in the scenario you just read. What are some economic factors that the economic scientist would consider when crafting his or her statement on the tax cut proposed? Describe how an economic policy advisor would approach the same tax cut and provide the reasoning behind the position. Remember to think like an economist scientist and economic policy advisor when you write your post, even if it goes against your own opinions about whether a tax cut is a good idea. To guide your responses, consider the following questions: What economic…
'The U.S., world's largest economy, went into recession in February of 2020. It has taken a broad range of steps to combat the economic disruption caused by COVID-19. In response to this crisis, governments have enacted sweeping and sizable fiscal stimulus of trillions of dollars.' Is it an appropriate policy response if the primary responsibility of the government is to maintain economic growth? Explain the significance of Fiscal policy for an economy? Is there any difference in the two approaches of fiscal expansion through - direct transfer benefit and government spending directly on purchase of goods and services that may influence real GDP? What role does multiplier play? Explicate. Support your answer with the suitable diagram/s.
What specific fiscal policy tools would you use to stimulate aggregate demand and how? also include the references for my research later on.
Which of the following is NOT a tool of fiscal policy. O taxes O government spending Onterest rates none of the above Question 2 Assume the economy is in a deep recession. The appropriate fiscal policy response would be to: raise taxes and raise govemment expenditures cut taxes and cut govermment expenditures raise taxes and cut government expenditures O cut taxes and increase government expenditures D Question 3 Crowding out refers to the fact that: Tax cuts will cause inflation O Tax cuts may result in higher interest rates which will "crowd out" business investment spending O increased government spending will crowd out spending on imports none of the above
"The United States has the world'slargest fiscal deficit in total USdollars." Could anything be changedin this statement to correctly evaluatewhether the United States has a fiscaldeficit problem? a. We need to know how large theUS debt is already. b. Deficits should be expressed asa per cent of GDP to correctlyevaluate them. c. All of the information givenhere is necessary to correctlyevaluate whether the UnitedStates has a fiscal deficitproblem. d. We need to know whether thedeficit has occurred during aninflationary gap or arecessionary gap.
L Gve Up! Suppose the government, in an effort to avoid an increase in the deficit, votes for a budget neutral tax cut policy. Assume the marginal propensity to consume (MPC) is equal to 0.65 and taxes are cut by $9 billion. Round answers to the nearest billion, and specify decreases as a negative number. By how much will government spending change? change in government spending: $ billion What is the resulting change in the equilibrium level of real GDP? billion change in equilibrium level of real GDP: $
A recent study from the National Bureau of Economic Research examined what people did with the $1,200 per-person stimulus payments distributed the US in April 2020. On average people said they spent about 40 percent of the total dollar amount they received, with the remaining 60 percent of the money split roughly equally between saving and paying down debt. Suppose that stimulus payments totaled $US 100 billion. a. If the tax rate is equal to 0.30 and the marginal propensity to import 0.10, what is the short run effect of the stimulus program on GDP? b. How might the long-run effect of the stimulus policy differ from the short-run effect? c. Inflation in the US in 2020 was about 0.62 %. Some people fear that inflation will increase in 2021 and ahead. Give one argument that supports this fear. and one argument against.
The Canadian federal budget moved from a surplus of 9.6billioninthe2007-2008 fiscalyeartoade ficitof5.8 billion the next year, and a large deficit of S55.6 billion in 2009-2010. a. Suppose real GDP was at potential in each of the first two years. What can you conclude about the cause of the change in the budget deficit? Show this change in a diagram of the budget deficit function. b. Suppose from 2008-2009 to 2009-2010, two things happened: real GDP fell and the government implemented an expansionary fiscal policy (both of which were true). Show these two separate events in a diagram of the budget deficit function.
07. What factors make an expansionary "stimulus" fiscal policy effective? One answer a) A government budget deficit associated with fiscal stimulus should should borrow money from those who spend less and save more, to those who spend more and save less. b) A permanent decrease in taxes is more effective in stimulating spending than a temporary one c) An increase in government purchases of goods and services should be temporary and should not permanently displace private spending d) The most expansionary way of financing the budget deficit associated with a fiscal stimulus policy is by the central bank expanding the quantity of money in circulation. e) Infrastructure investment belongs with long-term growth policy, but invariably makes a poor element in stimulus policy because such investment normally take a long time to implement. f) All the above