1. Suppose the economy had been producing at potential output but is now experie
ID: 2494567 • Letter: 1
Question
1. Suppose the economy had been producing at potential output but is now experiencing a recession. Which of the following are discretionary fiscal policies that could bring the economy closer to potential output? CHECK ALL THAT APPLY. A. A reduction in government purchases B. Raising interest rates C. A tax cut D. Additional spending on national park facilities2. Suppose the government of nettland wants to finance a $1 million increase in government spending by selling bonds. According to some economists, the public will ______ (not buy bonds/spend less today/ spend more today) because they'll recognize that the government will have to _____ (lower taxes/default on the bonds/raise taxes) in the future to pay back the bonds.
3. The term "crowding out" refers to the concept that: A. Budget deficits can stimulate investment and the economy B. Budget deficits can bring higher interest rates and lower private investment C. Larger budget deficits can bring correspondingly larger trade deficits D. Larger budget deficits can bring correspondingly smaller trade deficits
4. When the U.S government runs a larger budget deficit by borrowing more money, the demand for loanable funds _____(increase/decrease). This leads to ____(lower/higher) interest rates. The capital of the nation will ____(increase/decrease). The U.S dollar will ____(depreciate/appreciate). Therefore, a larger budget deficit will lead to a ___(larger/smaller) trade deficit.
5. Which of the following concerns about the national debt are substantive? CHECK ALL THAT APPLY A. Paying off the U.S national debt will require future generations of Americans to decrease their purchases of goods and services by an amount equal to the existing debt l. B. If the share of the public debt owned by foreigners increases as the debt rises, Americans will have to transfer more of their purchasing power abroad. C. Government borrowing to refinance the debt may lead to higher interest rates. Higher interest rates reduce investment spending, leaving future generations with a smaller stock of capital goods. D. The large U.S national debt is in danger of bankrupting the federal government.
6. An increase in government debt ____(raises/lowers) real interest rates. Which of the following statements characterize the effect of this change on international trade? A. The dollar depreciates in value, making foreign currencies more expensive to U.S residents. B. The demand for U.S dollars falls C. U.S net exports tend to rise. D. U.S securities become more attractive to foreign investors. 1. Suppose the economy had been producing at potential output but is now experiencing a recession. Which of the following are discretionary fiscal policies that could bring the economy closer to potential output? CHECK ALL THAT APPLY. A. A reduction in government purchases B. Raising interest rates C. A tax cut D. Additional spending on national park facilities
2. Suppose the government of nettland wants to finance a $1 million increase in government spending by selling bonds. According to some economists, the public will ______ (not buy bonds/spend less today/ spend more today) because they'll recognize that the government will have to _____ (lower taxes/default on the bonds/raise taxes) in the future to pay back the bonds.
3. The term "crowding out" refers to the concept that: A. Budget deficits can stimulate investment and the economy B. Budget deficits can bring higher interest rates and lower private investment C. Larger budget deficits can bring correspondingly larger trade deficits D. Larger budget deficits can bring correspondingly smaller trade deficits
4. When the U.S government runs a larger budget deficit by borrowing more money, the demand for loanable funds _____(increase/decrease). This leads to ____(lower/higher) interest rates. The capital of the nation will ____(increase/decrease). The U.S dollar will ____(depreciate/appreciate). Therefore, a larger budget deficit will lead to a ___(larger/smaller) trade deficit.
5. Which of the following concerns about the national debt are substantive? CHECK ALL THAT APPLY A. Paying off the U.S national debt will require future generations of Americans to decrease their purchases of goods and services by an amount equal to the existing debt l. B. If the share of the public debt owned by foreigners increases as the debt rises, Americans will have to transfer more of their purchasing power abroad. C. Government borrowing to refinance the debt may lead to higher interest rates. Higher interest rates reduce investment spending, leaving future generations with a smaller stock of capital goods. D. The large U.S national debt is in danger of bankrupting the federal government.
6. An increase in government debt ____(raises/lowers) real interest rates. Which of the following statements characterize the effect of this change on international trade? A. The dollar depreciates in value, making foreign currencies more expensive to U.S residents. B. The demand for U.S dollars falls C. U.S net exports tend to rise. D. U.S securities become more attractive to foreign investors. A. A reduction in government purchases B. Raising interest rates C. A tax cut D. Additional spending on national park facilities
2. Suppose the government of nettland wants to finance a $1 million increase in government spending by selling bonds. According to some economists, the public will ______ (not buy bonds/spend less today/ spend more today) because they'll recognize that the government will have to _____ (lower taxes/default on the bonds/raise taxes) in the future to pay back the bonds.
3. The term "crowding out" refers to the concept that: A. Budget deficits can stimulate investment and the economy B. Budget deficits can bring higher interest rates and lower private investment C. Larger budget deficits can bring correspondingly larger trade deficits D. Larger budget deficits can bring correspondingly smaller trade deficits
4. When the U.S government runs a larger budget deficit by borrowing more money, the demand for loanable funds _____(increase/decrease). This leads to ____(lower/higher) interest rates. The capital of the nation will ____(increase/decrease). The U.S dollar will ____(depreciate/appreciate). Therefore, a larger budget deficit will lead to a ___(larger/smaller) trade deficit.
5. Which of the following concerns about the national debt are substantive? CHECK ALL THAT APPLY A. Paying off the U.S national debt will require future generations of Americans to decrease their purchases of goods and services by an amount equal to the existing debt l. B. If the share of the public debt owned by foreigners increases as the debt rises, Americans will have to transfer more of their purchasing power abroad. C. Government borrowing to refinance the debt may lead to higher interest rates. Higher interest rates reduce investment spending, leaving future generations with a smaller stock of capital goods. D. The large U.S national debt is in danger of bankrupting the federal government.
6. An increase in government debt ____(raises/lowers) real interest rates. Which of the following statements characterize the effect of this change on international trade? A. The dollar depreciates in value, making foreign currencies more expensive to U.S residents. B. The demand for U.S dollars falls C. U.S net exports tend to rise. D. U.S securities become more attractive to foreign investors.
Explanation / Answer
Mlutiple questions asked.
Q1 is answered below.
1.
Since the economy is in a recessionary state, it will need expansionary fiscal policy to reduce its fiscal gap.
Thus, the appropritate options will be: cutting taxes and increasing government expenditure, like speniding on infrastructure like national parks.
So, correct options: C and D
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