Appreciate the Macro Econ help. Thank you!?

Appreciate the Macro Econ help. Thank you!?

Postby cadwy24 » Thu May 19, 2011 11:32 am

3 questions I need help on. Appreciate the inputs

10. (The Multiplier and the Time Horizon) Explain how the steepness of the short-run aggregate supply curve affects the government’s ability to use fiscal policy to change real GDP.

11. (Automatic Stabilizers) Often during recessions, the number of young people who volunteer for military service increases. Could this rise be considered a type of automatic stabilizer? Why or why not?
12. (Permanent Income) “If the federal government wants to stimulate consumption by means of a tax cut, it should employ a permanent tax cut. If the government wants to stimulate saving in the short run, it should employ a temporary tax cut.” Briefly discuss this statement.
thanks
cadwy24
 
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Appreciate the Macro Econ help. Thank you!?

Postby dietz29 » Thu May 19, 2011 11:34 am

The general price level will increase more than real GDP.
Yes, it is part of government spending. The war can also help the economy during recession.
According to the permanent income theory of Milton Friedman,or the kife-cycle theory of Franco Modigliani, permanent tax cut only will lead to significant increase in consumption, and reduce saving.The data in the US between 2007 and 2008 showed this fact.
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