Question 9 Fiscal policy is more effective at stabilizing output under a fixed exchange rate compared...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 9 Fiscal policy is more effective at stabilizing output under a fixed exchange rate compared to a floating regime because of the following reason(s). [Note: Choose all the correct answer(s).] 4 pts A given increase in government spending must be accompanied by a proportionate decrease in taxes. Fiscal expansion under the fixed regime must be accompanied by an increase in domestic money supply to keep the exchange rate constant. Under the fixed regime, a fiscal expansion by itself would not increase the domestic interest rate. Under the floating regime, the central bank is not required to increase the domestic interest rate in response to a contractionary fiscal policy. Question 9 Fiscal policy is more effective at stabilizing output under a fixed exchange rate compared to a floating regime because of the following reason(s). [Note: Choose all the correct answer(s).] 4 pts A given increase in government spending must be accompanied by a proportionate decrease in taxes. Fiscal expansion under the fixed regime must be accompanied by an increase in domestic money supply to keep the exchange rate constant. Under the fixed regime, a fiscal expansion by itself would not increase the domestic interest rate. Under the floating regime, the central bank is not required to increase the domestic interest rate in response to a contractionary fiscal policy. Question 9 Fiscal policy is more effective at stabilizing output under a fixed exchange rate compared to a floating regime because of the following reason(s). [Note: Choose all the correct answer(s).] 4 pts A given increase in government spending must be accompanied by a proportionate decrease in taxes. Fiscal expansion under the fixed regime must be accompanied by an increase in domestic money supply to keep the exchange rate constant. Under the fixed regime, a fiscal expansion by itself would not increase the domestic interest rate. Under the floating regime, the central bank is not required to increase the domestic interest rate in response to a contractionary fiscal policy.
Expert Answer:
Answer rating: 100% (QA)
The detailed answer for the above question is provided below The correct answers are Fiscal expansio... View the full answer
Related Book For
Posted Date:
Students also viewed these economics questions
-
An average glass of milk contains 115 grams of calcium with a standard deviation of 8 grams. Using Chebyshev's theorem, construct an interval that contains the calcium of at least 50% of the glasses...
-
1. In the classical model, it is thought that the long-run: A. and short-run aggregate supply curves are both upward sloping. B. aggregate supply curve is vertical and the short-run aggregate supply...
-
Read the case study below and answer the questions. SHORT RUN STABILIZATION AND LONG RUN COMPETITIVENESS: THE LAVITAN CASE Growth of a young country Latvia a small, young country on the east coast...
-
For the planning process, it is helpful to have employee census information for Question 3 options: a) at least the last five years and projections for the future. b) all current employees younger...
-
Formulate the structure of the most likely product of the following reaction of 4-chloro-4-methyl-1-pentanol in neutral polar solution. Cl (CHJ2CCH-CH-CH-OH- HCl C6H12 +
-
< 5:56 Assignment Details .5G 20231_STRAT MGT/DECISION_5876 Assignment Instructions This week's assignment will entail an analysis of the six principal components of the macro-environment. Each of...
-
Presented below are selected financial data from the Bristol-Myers Squibb 2015 annual report. Using the ratio definitions from Exhibit 4.6, calculate the following ratios: receivable turnover,...
-
A man wants to help provide a college education for his young daughter. He can afford to invest $600/yr for the next 4 years, beginning on the girl's fourth birthday. He wishes to give his daughter...
-
REVIEW RELATED LITERATURE is one of the major sections in a Research Study. What are its classification? Discuss each. Why is review of related literature important to the findings and conclusion of...
-
Consider the following income tax footnote information for Oracle for the fiscal year ended May 31, 2019 (fiscal year 2019). The following is a geographical breakdown of income before the provision...
-
Movie theater employees are generally paid hourly. Design an incentive pay structure for AMC Theaters and explain how it would work.
-
If the auditor can reduce the time taken to complete the audit then the level of the audit fee will be reduced accordingly. Is it wise for accountants to invest in audit software packages and...
-
Ancira is a mail-order house that sells a single product which it produces in its completely automated plant. The only major expenses of the company are depreciation on plant and equipment and...
-
The use of CAATs requires the active cooperation of the companys staff. This may mean that the companys management can learn a great deal about the general approach to the types of test conducted by...
-
You are meeting with executives of Comal Cosmetics Corporation to arrange your firm's engagement to audit the corporation's financial statements for the year ended December 31, 19X8. One executive...
-
To what extent should companies consult their auditors before acquiring or updating their computer systems? Consider the implications of such consultation for audit risk and independence.
-
15. Here are two properties enjoyed by automorphisms of the upper half-plane. (a) Suppose is an automorphism of H that fixes three distinct points on the real axis. Then is the identity. (b) Suppose...
-
Outline some of the major problems confronting an international advertiser.
-
At the opening of this chapter, we referred to the events of May 1995, when the United States considered putting tariffs on imports of luxury cars from Japan. Specifically, on May 16, 1995, U.S....
-
In 2001, President George W. Bush and Federal Reserve Chairman Alan Greenspan were both concerned about a sluggish U.S. economy. They also were concerned about the large U.S. current account deficit....
-
Consider two countries, Spain and Italy, where the only two factors of production are capital and labor. Spain has 100 units of capital and 400 units of labor, and Italy has 200 units of capital and...
-
Why do labor unions exist?
-
Labor union membership has declined in part due to a. a shift in workers from manufacturing to the service sector. b. deregulation in unionized industries. c. increasing global competition. d. all of...
-
If labor unions successfully negotiate wage increases for their members, a. the wages of nonunion workers increase as well. b. the wages in nonunion sectors decrease. c. employment likely falls in...
Study smarter with the SolutionInn App