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How would the us government most likely react to a boom in the economy?
Increase government spending in order to stimulate the economy
When would an increase in government purchases be an appropriate countercyclical fiscal policy?
A decrease in government spending and increase in taxes.
When would the government most likely decrease its spending?
. When unemployment has decreased
An example of contractionary fiscal policy would be?
A decrease in government spending and increase in taxes
How would a government most likely respond to a slowdown in the economy?
Lowering taxes in order to stimulate spending
When would government most likely increase its spending?
When unemployment has increased
How would the us government most likely react to a boom in the economy?
Increase government spending in order to stimulate the economy
What would not increase GPD?
An increase in government spending on welfare programs would likely not increase GDP if the spending is not effectively stimulating economic activity and productivity. If the spending does not lead to increased consumption, investment, or exports, it may not have a significant impact on GDP growth.
How would the government most likely respond to decrease in consumer spending?
Lower taxes to make it easier for consumers and business to spend money.
When would an increase in government purchases be an appropriate countercyclical fiscal policy?
A decrease in government spending and increase in taxes.
When would the government most likely decrease its spending?
. When unemployment has decreased
An example of contractionary fiscal policy would be?
A decrease in government spending and increase in taxes
What would most likely occur if the government's priority was to increase government expenditures?
increase taxesincrease taxesincrease taxes.
How would a government most likely respond to a slowdown in the economy?
Lowering taxes in order to stimulate spending
Under what circumstances would the government most likely lower taxes?
Consumer spending has decreased recently.
How much does the GDP increase if an economy has a crowding out effect of 50 percent?
The GDP would likely not increase because 'crowding-out' implies that the public sector is reducing private sector investment. Since usually there are additional costs to government spending because of collection and distribution, I would expect crowding out must be less efficient than private investment could be and, therefore, GDP would not increase due to crowding out but would likely fall.
Which combination of fiscal policy actions would be most stimulative for an economy in a deep recession?
decrease taxes and increase government spending
