Ebook Economic the basic (3rd edition): Part 2
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Ebook Economic the basic (3rd edition): Part 2
www.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. President Ebook Economic the basic (3rd edition): Part 2 George w. Bush signed a bill to help prop up the failing banking system, and President Barack Obama followed with legislation that pumped $787 billion worth of federal spending and tax cuts into the faltering economy.These increases in federal spending and cuts in taxes helped prevent the Great Rec Ebook Economic the basic (3rd edition): Part 2ession from turning into something worse. But it also left the United States with a huge budget deficit as spending far exceeded tax revenues.In thisEbook Economic the basic (3rd edition): Part 2
chapter, we will analyze the economic effects of fiscal policy—that Is. decisions about government spending, taxes, and debt in both the short run andwww.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. President Ebook Economic the basic (3rd edition): Part 2ext couple of years. That Includes the spending increases and tax cuts that the government enacted to fight the Great Recession. In the long term, fiscal policy creates the link between government spending and taxation decisions and the country's economic growth.Fiscal policy is probably the most po Ebook Economic the basic (3rd edition): Part 2litically charged area of economics. Each year, lawmakers and government officials in Washington decide how to allocate trillions of dollars. The resuEbook Economic the basic (3rd edition): Part 2
lt is a federal budget hundreds of pages long in which every sentence can make a big impact on someone’s life or company. And of course, members of Cowww.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. President Ebook Economic the basic (3rd edition): Part 2eaving politics aside, reputable economists disagree about the right way to run fiscal policy. Some favor a larger role for the government, especially when the economy is in a slump. Others argue for shrinking government spending and taxation because they prefer less government interference and over Ebook Economic the basic (3rd edition): Part 2sight. And a third group of economists focuses on reducing the size of the budget deficit, which is the difference between spending and revenue.In thiEbook Economic the basic (3rd edition): Part 2
s chapter, we will lay out the basics of fiscal policy. We will discuss both the positive and negative impacts of government spending, taxes, and borrwww.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. President Ebook Economic the basic (3rd edition): Part 2 policy.FISCAL POLICY Decisions about government spending, taxes, and borrowing in the short and tong run.LEARNING OBJECTIVESAfter reading thts chapter, you should be able to:L011-1 Identify key differences between the private sector and government.L011-2 Describe the short-term impacts of increased Ebook Economic the basic (3rd edition): Part 2 government spending, and use the multiplier effect to calculate the effect of fiscal stimulus.L011 -3 Summarize the limitations of using increased goEbook Economic the basic (3rd edition): Part 2
vernment spending to stimulate growth.L011-4 Dtscuss the ways that changes In tax rates affect the economy.L011-5 Explain how the budget deficit affecwww.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. President Ebook Economic the basic (3rd edition): Part 2o boost spending by allocating an extra SIO million dollars for repairing a bridge that is about to collapse. We'll ignore for the moment the important question of where the added SIO million comes from (though we'll sec later in the chapter that this makes a big difference to the economy).The gover Ebook Economic the basic (3rd edition): Part 2nment spends some of the money on labor: architects and engineers to draw up the plans, truck drivers to move the supplies, construction workers to asEbook Economic the basic (3rd edition): Part 2
semble the parts, police officers to supervise the site. It spends someL011-2Describe the shortterm Impacts of increased government spending, and use www.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. President Ebook Economic the basic (3rd edition): Part 2will see later in this chapter) to combat the effect of recessions. Such increases in government spending and cuts in taxes are called fiscal stimulus because they involve changes in fiscal policy. Economist John Maynard Keynes originally proposed the use of government spending to stimulate the econ Ebook Economic the basic (3rd edition): Part 2omy in the 193ƠS during the Great Depression. He argued that the reason for the steep decline in GDP during the Depression was the lack of demand—a prEbook Economic the basic (3rd edition): Part 2
oblem the government could correct by spending more.money on equipment: cranes, drilling equipment, trucks. Other money goes for materials: steel, conwww.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. President Ebook Economic the basic (3rd edition): Part 2or and the demand schedule for construction materials and equipment both shift to the right, as we see in Figures 11.1 and 11.2.The effect of the increase in government spending is to push up the quantity of labor from L to L' and to push up the quantity of construction materials from Q to Q'. In ot Ebook Economic the basic (3rd edition): Part 2her words, unemployment falls because more workers arc employed. And production increases because more construction materials arc being demanded and sEbook Economic the basic (3rd edition): Part 2
upplied.This brings US to the following general principle: In the short term, an increase in government spending lowers unemployment and increases GDPwww.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. President Ebook Economic the basic (3rd edition): Part 2abor MarketAn increase tn government spending pushes the demand curve for labor to the right, which boosts the quantity of labor supplied and demanded from L to L'Quantity of labor Supplied and DemandedSince then, economists have had long and complexdisputes about the validity of the Keynesian appro Ebook Economic the basic (3rd edition): Part 2ach. Over time, they have come to better understand many of its limitations, which we will dis-cuss later in this chapter. However, facing a worseningEbook Economic the basic (3rd edition): Part 2
recession in late 2008 and early 2009. most economists agreed that it was important for the government to support demand. The American Recovery and Rwww.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. President Ebook Economic the basic (3rd edition): Part 21).FIGURE 11.2www.downloadslide.comCH11 FISCAL POLICYI n 2008 and 2009. the federal government I used its financial muscle to combat the Great Recession. PresidentGọi ngay
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