a 56+ -: 6 Macro Topic 54- Go ernment Defi... a https:api.schoology.comv1attachment266437328... AP Macro Topic 5.4 Government Deficits and Debt Part 1 Check Your Understandin - For each policy action, indicate how the following will be impacted. For the budget, identify if the action moves the budget towards surplus' or towards decit '. A re ate Real Price National \"my ggmagnd GDP Laval Budgm Debt Automatic stabilizers in a recessionary gap Automatic stabilizers in an inationary gap Tax cuts and government spending increases Government spending cuts and tax increases WW- Read the excerpt from the Semiannual Monetary Policy Report to Congress by Federal Reserve Chairman Ben Bernanke in 2013 and answer the questions. 3. 4. \"Although monetary policy is working to promote a more robust recovery, it cannot carry the entire burden of ensuring a speedier return to economic health. The economy's pertormance both over the near term and in the longer run will depend importantly on the course of fiscal policy. Significant progress has been made recently toward reducing the federal budget decit over the next few years. The projections released earlier this month by the Congressional Budget Office (CBO) indicate that, under current law, the federal deficit will narrow from 7 percent of GDP last year to 21/2 percent in fiscal year 2015. As a result. the federal debt held by the public (including that held by the Federal Reserve) is projected to remain roughly 75 percent of GDP through much of the current decade. However, a substantial portion of the recent progress in lowering the deficit has been concentrated in near-term budget changes, which, taken together, could create a significant headwind for the economic recovery. The CEO estimates that deficit-reduction policies in current law wrll slow the pace of real GDP growth by about 1-1/2 percentage points this year, relative to what it would have been otherwise." 5. According to Bernanke, identify the potential benefits of contractionary fiscal policy that Congress implemented in 2013. 6. Identify the potential costs associated with this contractionary scal policy. 7. How might focusing on the short-run recovery instead of decit reduction lead to less economic growth in the future? Explain. 8. Imagine that you are the president's economic advisor. After reading this report. do you recommend continuing with deficit reducing contractionary fiscal policy? Explain your reasoning. _ Do not post online Video Help, W Copyright Jacob Clifford, ACDC Leadership, 2019 10f1