User Account

All Pages

Effect of an increase in government purchases

Assignment Help Macroeconomics
Reference no: EM131159892

Fiscal Policy.

(a) The economic effect of an increase in government purchases is likely to depend on how the purchases are financed. Explain how an increase in G is increases output and employment if financed by a lump-sum tax (or debt), but is likely to decrease output and employment if financed with an income tax.

(b) The economic effect of an increase in government purchases is also likely to depend on the what the increased spending is used for. Suppose that the increase in spending is used to finance a school lunch program-goods and services that are viewed as perfect substitutes for privately-supplied school lunches by the private sector. Explain why such a program is unlikely to have much of an impact on output and employment even if it is financed with a lump-sum tax.

Reference no: EM131159892

Questions Cloud

Discuss in detail how to calculate net present value : Discuss in detail how to calculate net present value. In addition, explain why profitability, as a result of a purchase, must equal or exceed the cost of capital or purchase to be deemed worthy.
Determine the distribution of shearing stresses : The cantilever beam shown consists of a Z shape of 1/4-in. thickness. For the given loading, determine the distribution of the shearing stresses along line A9B9 in the upper horizontal leg of the Z shape.
Department of health and the federal government : You have been employed as an economist to advise the Department of Health and the Federal Government about the following issue. The minister has argued that raising the tax on alcohol is the most effective way to reduce alcohol abuse in our societ..
Write player classes that have certain behaviour : Write player classes that have certain behaviour. These classes will lead you along to implementing the players you will need for the project.
Effect of an increase in government purchases : The economic effect of an increase in government purchases is likely to depend on how the purchases are financed. Explain how an increase in G is increases output and employment if financed by a lump-sum tax (or debt), but is likely to decrease ou..
Compute the weighted average cost of capital : Compute the weighted average cost of capital. Which project(s) should be accepted? Compute the yield to maturity on the old issue and use this as the yield for the new issue.
Economist in the study of welfare economics : Give a reason why it is important as an economist in the study of welfare economics to analyse the degree to which individuals or firms, or any economic agent, responds to incentives.
What is protectionism and trade protectionism : What is protectionism? Explain what trade protectionism is, example: health and safety regulation. What are the argument favor of trade protectionism and what are some opposite or drawback of this.
Determining the return on investment : If you invest $1000 in a stock, borrowing $900 of the $1000 at 10 percent interest, and the stock price rises by 20 percent, what is the return on your investment?

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd