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Why did the federal budget go from a huge deficit in 1992 to a surplus in 1998? Explain the factors that contributed to the turnaround.
Burden of the Debt Suppose that budget deficits are financed to a considerable. How does this create a potential burden on future generations of Americans?
Interest on the Debt Why did interest payments on the national debt fall from 15.4 percent. Why is this percentage expected to increase in the future?
What did classical economists assume about the flexibility of prices, wages, and interest rates? What disagreements did Keynes have with classical economists?
Explain how the steepness of the short-run aggregate supply curve affects the government's ability to use fiscal policy to change real GDP.
find one article about a country where real wages are growing and one where real wages are falling. Compare and contrast economic situations in the countries.
Read the article Inflation Should Be Lesser Worry for MPC. At the time of publication, what was the output gap in South Africa?
Why Is Unemployment So High in Con tinental Europe? How do they compare to the explanations reviewed in the chapter case study?
Read the editorial Why We Need a Second Stimulus. What are three reasons given for a second round of federal spending to follow the 2009 stimulus plan?
Also has a component that varies directly with the level of real GDP. How would this affect the size of the government purchase and net tax multipliers?
How could a tax cut achieve the same result? Would the tax cut have to be larger than the increase in government purchases? Why or why not?
Explain why it has this impact. What is the impact on the level of real GDP demanded, assuming the price level remains unchanged?
Explain the difference between the government purchases multiplier and the net tax multiplier. If the MPC falls, what happens to the tax multiplier?
Assuming that this is true, what was the spending multiplier for the Cash for Clunkers program?
From Deficits to Surpluses to Deficits What effect did the financial crisis of 2008 have on the federal budget deficit?
Provide examples of automatic stabilizers. What is the impact of automatic stabilizers on disposable income as the economy moves through the business cycle?
Crowding Out Is it possible for U.S. federal budget deficits to crowd. How could German or British investment be hurt by large U.S. budget deficits?
Given the cyclical nature of government tax revenues and spending, how would the resulting budget deficit or surplus vary over the business cycle?
Explain the differences among an annually balanced budget, a cyclically balanced budget, and functional finance. How does each affect economic fluctuations?
The Federal Budget Process In what sense is the executive branch of the U.S. government always dealing with three budgets?
The Federal Budget Process The federal budget passed by Congress and signed by the president. Why does the budget require a forecast of the economy?
Spending Multiplier If the MPC is 0.8, the MPM is 0.1, and the proportional income tax rate is 0.2, what is the value of the spending multiplier?
What is the size of the government deficit (or surplus) at this output level? What is the size of net exports at the level of real GDP demanded?
Crowding Out How might federal deficits crowd out private domestic investment? How could this crowding out affect future living standards?
Read the article Will Productivity Pull Us Out? Traditionally, why do Canada and Europe experience slower productivity growth after a recession than does U.S.?