Fiscal Policy and how it can be implemented in a recessionary gap. Recently, COVID-19 has resulted in many government officials issuing executive orders to shelter in place as a way to fight surge in COVID-19 cases, except for those working in industries that provide essential needs. How might this impact the nation’s productivity, and what can the government do in response?

Fiscal Policy and how it can be implemented in a recessionary gap. Recently, COVID-19 has resulted in many government officials issuing executive orders to shelter in place as a way to fight surge in COVID-19 cases, except for those working in industries that provide essential needs. How might this impact the nation’s productivity, and what can the government do in response?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.7P

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Similar questions

Under what general macroeconomic circumstances might a government use expansionary fiscal policy? When might it use contractionary fiscal policy?
Based on the national saving and investment identity, what are the three ways the macroeconomy might react to greater government budget deficits?
'The U.S., world's largest economy, went into recession in February of 2020. It has taken a broad range of steps to combat the economic disruption caused by COVID-19. In response to this crisis, governments have enacted sweeping and sizable fiscal stimulus of trillions of dollars.' Is it an appropriate policy response if the primary responsibility of the government is to maintain economic growth? Explain the significance of Fiscal policy for an economy? Is there any difference in the two approaches of fiscal expansion through - direct transfer benefit and government spending directly on purchase of goods and services that may influence real GDP? What role does multiplier play? Explicate. Support your answer with the suitable diagram/s.
40. Which of these would help a government fight a recession? raising taxes cutting taxes cutting spending paying down the national debt
An economy is in long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. What kind of gap - inflationary or recessionary - will the economy face after the shock, and what type of fiscal policies would help move the economy back to potential output? How would your recommended fiscal policy shift the aggregate demandcurve? (Note: you do not need to draw anything).(a) A stock market boom increases the value of stocks held by households.(b) Firms come to believe that a recession in the near future is likely.(c) Anticipating the possibility of war, the government increases its purchases of military equipment.(d) The quantity of money in the economy declines and interest rates increase.
explanation. Be sure to exp Assume the United States has been in another recession for the past 10 months. Unemployment is 10% and GDP has dropped $1.9 trillion from its previous peak of $ 20.8 trillion. The housing and heavy equipment industries have been hit the hardest. Inflation has been near the 2% target but has started to dip below. Also, the countries average MPC is 60. Determine the best fiscal policy/strategy to help the economy recover and explain why it is the best choice. Be sure to reference Aggregate Demand and Aggregate Supply and explain your specific tools in your answers. Calculations Explanation Graph (More space for the explanation on the back)
4. The government decides to pursue a policy of keeping the amount of tax revenue it collects to be a fixed amount. In terms of tax rates, is this policy pro-cyclical, countercyclical, or neutral? Is this a good policy for the government to adopt?
What is role of the private sector in helping the Filipino government ease its fiscal pressure?
Suppose there is a deflationary gap in the economy and the government plans to introduce expansionary fiscal policy to move expenditure closer to full employment level of output. They will increase spending on infrastructure projects such as roads, ports, bridges, dams etc. At the same time households and firms have become pessimistic about the future and cut back spending to save more for difficult days ahead. Answer the questions below based on the government's planned policy and consumers' and firms' pessimism. What happens to the Marginal Propensity to Consume in the economy ? Choose. What happens to the Spending Multiplier? Choose. Would the effect of expansionary fiscal policy on total demand be more effective or less More effective effective? Decreases Increase Less effective
#3. Fiscal policy can affect the rental cost of capital. true or false.?
1. Which of the following is NOT a category of fiscal policy? Group of answer choices government policies regarding taxation government policies regarding money supply in the economy government policies regarding transfer payments and welfare benefits government policies regarding the purchase of goods and services 2. Disposable income Group of answer choices increases when net taxes increase. increases when saving decreases. decreases when saving increases. increases when income increases.
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