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- A. Calculate the levels of consumption and savings that occurs when the economy is in equilibrium. B. Computer the government budget deficit in this economy. C. If government spending in banana land increases by $1000 what is the amount of the increase in equilibrium output? D. If taxes in banana land decrease by $1000 what is the new equilibrium output in this economy? E. To keep the government budget balanced, of both government spending and taxes in banana land increase by $1000 what is the change in equilibrium income level?How does the government budget process impact fiscal policy decisions, and what are the potential consequences of budget deficits and surpluses? A) The government budget process has no bearing on fiscal policy decisions. B) The government budget process involves decisions about government spending and taxation; budget deficits occur when spending exceeds revenue, while surpluses occur when revenue exceeds spending. Deficits may lead to increased borrowing and interest payments, while surpluses can reduce government debt. C) The government budget process exclusively focuses on taxation and has no relation to spending. D) Budget deficits always lead to economic stability.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…
- Which 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 Government12 Interest rates are a key weapon in fiscal policy Select one: a. False b. True1. How did U.S. government responded to global health pandemic? What kind of steps have they taken? How did Federal Reserve responded to the recent health pandemic? Where is the Fed Funds rate as of today? Are there any other steps that can be taken by the government in terms of fiscal policies? Please elaborate.
- 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 aboveWhich one of the following statements is TRUE about the concept of crowding out? Select one: a. Crowding out causes the textbook multiplier to become larger b. “Crowding out” occurs because the Fed increases money supply and lowers interest rate c. “Crowding out” occurs because the Govt increases govt expenditures and this causes private consumption and investment to increase d. “Crowding out” occurs because the Govt increases govt expenditures and this causes private consumption and investment to decrease6. Assume that the economy is facing the zero lower bound.a. Explain how the Federal Reserve might engage in expansionary monetary policy and what that will do when the economy is facing the zero lower bound.b. Explain how expansionary fiscal policy might influence the economy when facing the zero lower bound.
- 1. 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?What is the difference between the federal budget deficit and the national debt? a. The budget deficit is the amount by which expenditures exceed revenues in a particular year, while the national debt is the cumulative effect of all past budget deficits and surpluses. b. The budget deficit is the cumulative effect of all prior national debts. c. The national debt includes all outstanding bonds, while the budget deficit excludes bonds held by government agencies. d. This is a trick question because there is no difference between the budget deficit and the national debt.39 2 points 01:12:10 · eBook Suppose the federal government had budget deficits of $40 billion in year 1 and $100 billion in year 2 but had budget surpluses of $20 billion in year 3 and $50 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt. At the end of these four years, the federal government's public debt would have Multiple Choice O O decreased by $70 billion. Increased by $140 billion. decreased by $70 billion. increased by $70 billion.