Chapter 13: Types of fiscal policy (page 264)
What happens between the public and private sectors during a "crowding out" effect?
The public sector displaces the private sector
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Explain how built-in (automatic) stabilizers work. What are the differences between proportional, progressive, and regressive tax systems as they relate to an economy’s built-in stability?
True or false? If false, explain why.
The total public debt is more relevant to an economy than the public debt as a percentage of GDP.
An internally held public debt is like a debt of the left hand owed to the right hand.
The Federal Reserve and federal government agencies hold more than three-fourths of the public debt.
As a percentage of GDP, the total US public debt is the highest such debt among the world’s advanced industrial nations.
What happens to the taxation and government spending rates during an expansionary fiscal policy?
Define the cyclically adjusted budget, explain its significance, and state why it may differ from the actual budget. Suppose the full-employment, noninflationary level of real output is GDP3 (not GDP2) in the economy depicted in Figure 13.3. If the economy is operating at GDP2 instead of GDP3, what is the status of its cyclically adjusted budget? The status of its current fiscal policy? What change in fiscal policy would you recommend? How would you accomplish that in terms of the G and T lines in the figure?
What do economists mean when they say Social Security and Medicare are “pay-as-you-go” plans? What are the Social Security and Medicare trust funds, and how long will they have money left in them? What is the key long-run problem of both Social Security and Medicare? To fix the problem, do you favor increasing taxes or do you prefer reducing benefits?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
