Question

Which statement below about expansionary fiscal policy is true? If it is based on a tax...

Which statement below about expansionary fiscal policy is true?

  • If it is based on a tax cut, it will trigger the multiplier effect.

  • It could include lowering interest rates.

  • It generally has a negative effect on GDP.

  • It could include decreasing the reserve requirement.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Government use expansionary fiscal policy to stimulate the economy. Increase government spending or decrease in taxes are the tools of the expansionary fiscal policy.

Tax cut is a tool of expansionary fiscal policy and it has multiplier effect on the GDP level of the economy.

A expansionary fiscal policy, shifts the IS curve rightward which leads to increase in inrease rate.

Expansionary fiscal policy has a positive effect on GDP.

Change in reserve requirement is tool of monetary policy.

Answer: Option (A) i.e., If it is based on a tax cut, it will trigger the multiplier effect

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Determine which statement below is true of ONLY contractionary policy. This includes monetary and fiscal policy...
Determine which statement below is true of ONLY contractionary policy. This includes monetary and fiscal policy Lowering interest rates are an example of this This can help reduce unsustainable levels of production Too much of this can lead only to inflation
Question 2: Fiscal Policy Suppose the economy is in a recessionary gap, and the government reponds...
Question 2: Fiscal Policy Suppose the economy is in a recessionary gap, and the government reponds by conducting an expansionary fiscal policy. a. Suppose the marginal propensity to consume is 0.8. Calculate the effect of a $1,000 increase in government purchases on real GDP, and then calculate the effect of a $1,000 tax cut on real GDP. b. Why does a $1,000 tax cut generate a smaller multiplier effect than a $1,000 increase in government purchases?
Use the IS-LM framework to carefully explain how such an expansionary fiscal policy, either tax cut...
Use the IS-LM framework to carefully explain how such an expansionary fiscal policy, either tax cut or government spending increase or both, affects the equilibrium output, interest rate and investment.
True or false? Explain your answer. a. Unlike fiscal policy, expansionary monetary policy will not cause...
True or false? Explain your answer. a. Unlike fiscal policy, expansionary monetary policy will not cause multiplier effects and crowding out effects. b. The government should not implement a zero-inflation policy, because when inflation is zero, the unemployment rate will be too high, which is lasting higher cost for the economy.
Which of the following can be categorized under fiscal policy? A. Increase in money supply B....
Which of the following can be categorized under fiscal policy? A. Increase in money supply B. Decrease in money supply C. Increase in federal funds rate D. Decrease in reserve requirement E. Increase in tax rates Calculate the government spending multiplier if, an increase in government spending by $5 million increases real GDP by $25 million. A. 0.2 B. 0.5 C. 2 D. 5 E. 6
Which of the following statements regarding fiscal policy are true? Select all that apply. Select one...
Which of the following statements regarding fiscal policy are true? Select all that apply. Select one or more: a. fiscal policy affects taxes and/or government spending b. fiscal policy is directed by the Federal Reserve in the United States c. fiscal policy changes the money supply 2. According to the multiplier effect, if MPC = 0.6, then what is the effect of a $100,000 increase in government spending on aggregate demand? Answer:
1. Countercyclical fiscal policy consists of: a. using expansionary fiscal policy during times of recession and...
1. Countercyclical fiscal policy consists of: a. using expansionary fiscal policy during times of recession and contractionary fiscal policy during times of recession. b. using expansionary fiscal policy during times of recession and contractionary fiscal policy during times of expansion. c. using expansionary fiscal policy during times of expansion and contractionary fiscal policy during times of recession. d. using expansionary fiscal policy during times of expansion and contractionary fiscal policy during times of expansion. e. using expansionary fiscal policy and...
33. Which of the following is true for an expansionary fiscal policy? a. It leads to...
33. Which of the following is true for an expansionary fiscal policy? a. It leads to a fall in the interest rate. b. It has no impact on the aggregate output. c. It causes an increase in the aggregate demand. d. It increases the level of imports. 34. An increase in the domestic price level will: a. shift the IS curve to the right. b. shift the LM curve to the right. c. shift the FE curve to the left....
1) give 2 examples of expansionary fiscal policy, what are its economic goals? 2) give 2...
1) give 2 examples of expansionary fiscal policy, what are its economic goals? 2) give 2 examples of contractionary fiscal policy, what will be the effect on government surplus/deficit 3)under a particular tax sysem, the government collects 80 billion in tax revenues when gdp is 800 million and 88 billion when gdp is 900 billion. is this tax systems regressive, propotional or progressive 4) in year 1 the full employment budget showed a deficit of 100 billion and the actual...
Which of the following is true? Fiscal policy involves expanding and contracting the money supply Fiscal...
Which of the following is true? Fiscal policy involves expanding and contracting the money supply Fiscal policy involves raising and lower interest rates Monetary policy involves the central bank Monetary policy involves the tax code
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT