Question
21. What happens to output and the level of employment if government spending increases, holding everything else constant? 22. The government is considering increasing the
21. What happens to output and the level of employment if government spending increases, holding everything else constant? 22. The government is considering increasing the tax rate on income generated from work. If this action is taken, what effect would it have on potential GDP and why?
23. Mention some examples of macroeconomic objectives that are sought to be achieved with fiscal policy. 24. What is meant by a federal budget surplus? 25. What happens to government debt when there are persistent budget deficits?
26. In general terms, what is the relationship between taxes and investment? 27. What impact does a tax cut have on real GDP and employment? 28. What is meant by the federal budget deficit? 29. The government is considering increasing the tax rate on income generated from work. If this action is taken, what effect would it have on the equilibrium wage before taxes, and why? 30. The economy is in recession and the recessionary gap is large. What are the risks of a discretionary fiscal policy?
31. If an income tax is placed, what happens to the amount of work?
32. The economy is in recession, the recessionary gap is large, and there is a federal government budget deficit. If the government increases discretionary spending, explain how the structural deficit is changed. 33. If in a given country investment is $1.6 trillion, saving is $1.4 trillion, government spending is $1.5 trillion, exports are $2 trillion, and imports are $2.5 trillion. Explain the impact of the budget on the investment.
34. What is the name of the gap between the wage rate before taxes and after taxes? 35. What happens to conditional public spending during an economic expansion? 36. The government is considering increasing the tax rate on income generated from work. If this action is taken, what effect would it have on the job supply and why? 37. The economy is in recession and the recessionary gap is large. Describe a discretionary fiscal stimulus package that could be used without risk of increasing the budget deficit? 38. If in a given country investment is $1.6 trillion, saving is $1.4 trillion, government spending is $1.5 trillion, exports are $2 trillion and imports are $2.5 trillion, how much is the balance of the government budget? 39. What is meant by fiscal policy? 40. What is the relationship between tax collection and consumption? Explain briefly.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started