Consider an economy that has the following GDP and price levels if there was no fiscal policy: Year Potential real GDP 1 $18 trillion $18.2 trillion $18.7 trillion 2 3 Actual real GDP $18 trillion $18.3 trillion $18.5 trillion Price level 175 182 187 What should the government do if it wants the real GDP at its potential level in year 1 and there were no fiscal policy lags? Choose one: A. recommend an expansionary fiscal policy B. recommend a contractionary fiscal policy O C. no change is necessary See Hin

Consider an economy that has the following GDP and price levels if there was no fiscal policy: Year Potential real GDP 1 $18 trillion $18.2 trillion $18.7 trillion 2 3 Actual real GDP $18 trillion $18.3 trillion $18.5 trillion Price level 175 182 187 What should the government do if it wants the real GDP at its potential level in year 1 and there were no fiscal policy lags? Choose one: A. recommend an expansionary fiscal policy B. recommend a contractionary fiscal policy O C. no change is necessary See Hin

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 5P

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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?
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What is fiscal policy? What are the tools of fiscal policy? Discuss the impact of expansionary fiscal policy and specifically the fiscal policies used during the Great Recession of 2008-2009 on operation of business operation. Have we seen other significant fiscal policies enacted even more recently than 2008-9
1. Provide a written conclusion on Fiscal Policy?
16) What is the first signal that policy makers may need to examine expansionary fiscal economic policy A. A decrease in AS B. A decrease in AD C. A decrease in LRSA D. An increase in AS
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Question 23 Price level (GDP deator 2000-100) 130 120 110. 100 90 0 9 Potential GOP AS AD 9.5 10 10.5 11 115 Real GDP (trillions of 2000 dollars) If an economy is at the macroeconomic equilibrium illustrated by the figure above, an appropriate fiscal policy to adjust the economy to full employment,Yf is to implement increase money supply O decrease government expenditures and/or raise taxes O decrease taxes and/or raise government expenditure. O decrease money supply