Question

The economy is in a boom and the inflationary gap is large. Describe the discretionary and...

The economy is in a boom and the inflationary gap is large. Describe the discretionary and automatic fiscal policy actions that might occur. Discretionary fiscal policy that might occur is​ ______.    Automatic fiscal policy that might occur is​ ______.     

 
A. an increase in transfer payments and a fall in taxes with no interference by​ Parliament; an increase in government expenditure and a cut in taxes by a decision of Parliament
B. a decrease in transfer payments and an increase in taxes with no interference by​ Parliament; a decrease in government expenditure and an increase in taxes by a decision of Parliament
C. a decrease in government expenditure and an increase in taxes by a decision of​ Parliament; a decrease in transfer payments and an increase in taxes with no interference by Parliament
D. an increase in government expenditure and a cut in taxes by a decision of​ Parliament; an increase in transfer payments and a fall in taxes with no interference by Parliament

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:-

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
1) If an economy is experiencing an inflationary gap, will the Federal Reserve System seek to...
1) If an economy is experiencing an inflationary gap, will the Federal Reserve System seek to lower or raise interest rates? How will it do that? 2) What is meant by the term "automatic stabilizer"? What are some examples of automatic stabilizers? How do automatic stabilizers differ from discretionary fiscal policy?
Is a recessionary or inflationary gap bad for an economy? Have you ever wondered how the...
Is a recessionary or inflationary gap bad for an economy? Have you ever wondered how the federal government and the Federal Reserve react to smooth out recessionary and inflationary gaps? In this activity, you will explore the concepts of fiscal policy and the attempts the U.S. government takes when the U.S. economy is in a recessionary or inflation gap. You will discuss the concepts of aggregate supply and aggregate demand to determine how the U.S. economy can work its way...
Explain the effect of a discretionary cut in taxes of $60 billion on the economy when...
Explain the effect of a discretionary cut in taxes of $60 billion on the economy when the economy’s marginal propensity to consume is 0.8. How does this discretionary fiscal policy differ from a discretionary increase in government spending of $60 billion?
21. Suppose the economy is an inflationary gap. According to neoclassical economists, what will happen? Select...
21. Suppose the economy is an inflationary gap. According to neoclassical economists, what will happen? Select all that apply: A tight labor market will put upward pressure on wages, causing AS to shift to the left. Unemployment will put downward pressure on wages, causing AS to shift to the right. The economy will return to its potential levels of output. The economy will remain in the inflationary gap for a prolonged period. 28.)A shock to the economy, such as a...
An economy currently has an inflationary gap. An increase in the money wage rate will​ ________...
An economy currently has an inflationary gap. An increase in the money wage rate will​ ________ the inflationary gap and​ ________ the price level. A. ​increase; increase B. ​decrease; increase C. ​increase; decrease D. ​decrease; decrease Which of the following is NOT an asset of the Federal Reserve​ System? A. U.S. government securities B. loans to depository institutions C. reserves of depository institutions D. None of the above are correct because they are all assets of the Federal Reserve
A. What is meant by the term, Discretionary Fiscal Policy? B. Discuss ways in which indirect...
A. What is meant by the term, Discretionary Fiscal Policy? B. Discuss ways in which indirect crowding out and direct expenditure offsets can reduce the effectiveness of fiscal policy actions. C. List and define fiscal policy time lags and explain why they complicate efforts to engage in fiscal “fine-tuning.” D. Describe how certain aspects of fiscal policy function as automatic stabilizers for the economy.
1) Open market purchase will result in: increase in bank reserves and a decrease in the...
1) Open market purchase will result in: increase in bank reserves and a decrease in the federal funds rate. increase in bank reserves and an increase in the federal funds rate. decrease in bank reserves and a decrease in the federal funds rate. decrease in bank reserves and an increase in the federal funds rate. 2) An increase in government expenditure would shift the: A) aggregate demand curve rightward. aggregate demand curve leftward. aggregate supply curve rightward. aggregate supply curve...
Assume that there are two economies, A and B. Economy A is experiencing an inflationary output...
Assume that there are two economies, A and B. Economy A is experiencing an inflationary output gap, and economy B is experiencing a recessionary output gap. Illustrate the two economies in labeled graphs. Explain what will happen to wages and other factor prices in economy A and if this will increase or decrease firm's unit cost. Given your answer in (b) show the effects on the AS curve. Explain what happens to real GDP and the price level. Explain what...
9. In the face of an inflationary gap, the appropriate fiscal policy is to:    Do...
9. In the face of an inflationary gap, the appropriate fiscal policy is to:    Do nothing since the short run aggregate supply is vertical and any government action will be crowded out Reduce government spending and raise the discount rate Reduce government spending while also lowering taxes to offset the government spending multiplier Reduce government spending Increase government spending 10,A few years ago the Wall Street Journal reported that “U.S. productivity grew at the fastest clip in more than...
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?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT