The impact of fiscal stimulus on aggregate demand includes both new government spending and all subsequent induced increases in consumer spending triggered by the initial government outlays.
Answer the following statement true (T) or false (F)
True
Fiscal stimulus will set off the multiplier process. As a result of this, aggregate demand will increase (shift) in two distinct steps: (1) the initial fiscal stimulus and (2) induced changes in consumption.
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If Congress and the president pursue an expansionary fiscal policy at the same time as the Federal Reserve pursues an expansionary monetary policy, how might the expansionary monetary policy affect the extent of crowding out in the short run?
What will be an ideal response?
Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. What is the difference in the deadweight loss compared to a monopoly in this market?
A. A monopoly would create $6,666.67 more deadweight loss B. A monopoly would create $6,666.67 less deadweight loss C. A monopoly would create $5,555.56 more deadweight loss D. A monopoly would create $5,555.56 less deadweight loss
On the graph above, if the U.S. economy is at point B in 2009, then the economy in 2010 is best represented by point ________
A) A B) B C) C D) D E) any of the labeled points is as good as the others
Which of the following is not a legitimate reason for maintaining federal budget deficits? a. Deficits boost domestic saving, which in the long run could promote economic growth. b. Deficits help reduce the size and duration of recessions through automatic stabilizers. c. Deficits are used to finance capital projects
d. Public spending through deficit financing wins support from the voters. e. A federal budget deficit stimulates aggregate demand.