Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help by answering the following question! Suppose that the federal government undertakes fiscal policy designed to increase government spending by $100 B and state

Please help by answering the following question!

Suppose that the federal government undertakes fiscal policy designed to increase government spending by $100 B and state and local governments cut their budgets due to falling tax revenue? What have state and local government actions done to the effectiveness of federal fiscal policy?

a. State and local government changes have not affected the federal government's policy.

b. State and local government changes have reinforced and strengthened the federal government's policy. c. State and local government changes have opposed and weakened the federal government's policy.

The government can finance additional spending in one of three ways: borrowing from the public by selling them newly issued bonds, increasing taxes or monetization: What is monetization?

a. The FED buying existing U.S. bonds from the public

b. selling new bonds directly to the FED c. borrowing from private banks (loans)

d. selling gold reserves

Economists generally believe that a federal Balanced Budget Amendment would:

a. create a more stable economy and pay off the debt faster

b. make recessions shorter and control inflation better

c. make recessions deeper and inflation higher

Initially, demand-side inflation:

a. decreases GDP, increases unemployment and causes prices to rise. b. increases GDP, decreases unemployment and causes prices to fall.

c. increases GDP, decreases unemployment and causes prices to rise.

d. decreases GDP, decreases unemployment and causes prices to rise

When OPEC raised prices drastically in the 1970s, it caused a negative supply shock. Negative supply shocks result in:

a. rising GDP, rising prices and fallng unemployment

b. rising GDP, falling prices and falling unemployment

c. falling GDP, rising prices and rising unemployment

d. falling GDP, falling prices and rising unemployment

Bad storms (especially in geographically small counties), eruptions of volcanoes, outbreaks of wars and earthquakes are all possible causes of

a. negative supply shocks

b. negative demand shocks

c. positive supply shocks

d. positive demand shocks

When 9/11 occurred, people felt hopeless and afraid. They decreased their spending and canceled trips on planes and cruise ships. They saved more because they expected times to get worse. This was an example of the:

a. supply-side inflation

b. a negative demand shock c. demand side inflation d. a negative supply shock

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Theory Of Moral Sentiments

Authors: Adam Smith, D D Raphael

1st Edition

0865970122, 9780865970120

More Books

Students also viewed these Economics questions

Question

1. Make sure materials are easy to reach and visible to students.

Answered: 1 week ago

Question

=+6. Did your solution clearly highlight the main consumer benefit?

Answered: 1 week ago