23. If the economy is in a recession and a decrease in taxes is proposed, Keynes

Question

23. If the economy is in a recession and a decrease in taxes is proposed, Keynesians would call it a(n)(expansionary/ contractionary/ budge policy approach that is designed to cause the Laffer) curve to- (increase / decrease / stabilize). t neutral) (fiscal / monetary / supply-side free market) the economy is in a recession and a decrease in taxes is proposed, followers of trickle-down economics would call it a(n) (expansionary/ contractionary / budget neutral) (fiscal / monetary / supply-side / free market) policy approach that is designed to cause the (AD / AS / Phillips / Laffer) curve to (increase / decrease / stabilize). 25. Classical Theory came about as a way to explain the problem of_ 26. Keynesian Theory came about as a way to explain the problem of 27. The Modern Theory of Keynesian economists evolved bécause which original Keynesian assumption was no longer true in the post-WWll economy? Monetarist Theory evolved because Monetarists believed that the economic problem ofwas the only problem that should be focused on. The economic problem ofwould easily be resolved by letting the market take care of it without interference from any government agency. 28. 29. Supply-side Theory has the(most /least / most compelling) research behind it of all the macroeconomic theories.

Explanation / Answer

Question 23

Change in taxes is the domain of the fiscal policy.

When taxes are decreased, it is said that expansionary fiscal policy is being implemented.

On the other hand, if taxes are increased then it is said that contractionary fiscal policy is being implemented.

Decrease in taxes increases the disposable income of households which induces them to consume more leading to increase in aggregate demand.

So,

If the economy is in recession and a decrease in taxes is proposed, Keynesians would call it an expansionary fiscal policy approach that is designed to cause the AD curve to increase.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.