1 explain what effect an expansionary fiscal policy would

Reference no: EM13375539

1. Explain what effect an expansionary fiscal policy would have on the price level and real GDP starting from full employment equilibrium.

2. Why does a larger government budget deficit increase the magnitude of the crowding-out effect?

3. How does the multiplier work and what might government use it for?

4. Explain what effect a contractionary fiscal policy would have on the price level and real GDP starting from full employment equilibrium.

5. What are automatic stabilizers and how do they affect the economy? Which is the most important?

6. Suppose government spending increases in a closed economy. Would the effect on aggregate demand be larger if the Bank of Canada took no action in response, or if the Bank were committed to maintaining a fixed interest rate? Explain (6 Marks)

7. In which of the following circumstances is expansionary fiscal policy more likely to lead to a short-run increase in investment? Explain 1. when investment accelerator is large, or when it is small?

2. when the interest sensitivity of investment is large, or when it is small?

3. when the marginal propensity to import is small, or when it is large?

8. For various reasons, fiscal policy changes automatically then output and employment fluctuate.

1. Explain why tax revenue changes when the economy goes into a recession.

2. Explain why government spending changes when the economy goes into a recession.

3. If the government were to operate under as strict balanced-budget rule, what would it have to do in a recession? Would that make the recession more or less severe?

Reference no: EM13375539

Questions Cloud

You are asked questions about 5 mutually exclusive : you are asked questions about 5 mutually exclusive candidates described as follows all quantities are in

How can you use caats to detect fraud what do you gain by : how can you use caats to detect fraud? what do you gain by using caats to detect

Newspaper reports frequently suggest that the : newspaper reports frequently suggest that the administration regardless of who is president wants the fed to lower

Contemplating awarding a contract to the azusa : contemplating awarding a contract to the azusa manufacturing company for the assembly of wiring harnesses. included in

1 explain what effect an expansionary fiscal policy would : 1. explain what effect an expansionary fiscal policy would have on the price level and real gdp starting from full

1name 5 stylized facts about the business cycle2 rank order : 1.name 5 stylized facts about the business cycle.2. rank order these three ideas from most optimistic about how a

1 a newspaper recently lowered its price from 3 to 1 as it : 1 a newspaper recently lowered its price from 3 to 1. as it did the number of newspapers sold increased from 240000 to

Question 1 libertyville has two optometrists dr smith s and : question 1. libertyville has two optometrists dr. smith s and dr. jones s. each optometrist can choose to advertise his

Present your solution to the following problem in an excel : present your solution to the following problem in an excel document.problem 1cool beans company has 30000 shares of 2

User Account

All Pages