4. The government decides to pursue a policy of keeping the amount of tax revenue it collects to be a fixed amount. In terms of tax rates, is this policy pro-cyclical, countercyclical, or neutral? Is this a good policy for the government to adopt?

4. The government decides to pursue a policy of keeping the amount of tax revenue it collects to be a fixed amount. In terms of tax rates, is this policy pro-cyclical, countercyclical, or neutral? Is this a good policy for the government to adopt?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter30: Government Budgets And Fiscal Policy

Section: Chapter Questions

Problem 30RQ: Under what general macroeconomic circumstances might a government use expansionary fiscal policy?...

See similar textbooks

Related questions

Q: Please summarize and do the key findings of the Reviving Growth report (WORLD BANK EAST ASIA AND THE…

A: The East Asia and Pacific Economic Update offers an evaluation of the regional East Asia and Pacific…

Q: South Korea, Japan, and China are the major buyers of Qatar’s natural gas. During the COVID-19…

A: The global economic system's interaction highlights the significance of worldwide cooperation,…

Q: The expenditure approach to GDP is Select one: A. GDP =C+IR + G + X B. GDP =C+I+G+ NX C. GDP = C+U+G…

A: The expenditure approach to GDP measures the GDP level through the expenditure. The expenditures on…

Q: c) Suppose the inverse demand curve in a market is D(p) =a-bp, where D(p) is the quantity demanded…

A: In this case, leader and follower firms are discussed and Stackelberg model is discussed here.…

Q: Why the market tends to fail when dealing with environmental issues? It is said many externalities…

A: Environmental economics studies the impact of economics on various environmental issues. It explains…

Q: A tax that takes a smaller percentage of an individual's income as their income rises is called a a.…

A: Tax are the mandatory charge levied by the government. There are two types of tax:- direct tax and…

Q: 1.) Use the rectangle drawing tool to shade in the revenue received by kumquat producers before the…

A: Price floor is the minimum price set by the government for producer's interest. and it is set above…

Q: QUESTION 5 Assume Country A is planning to build a virtual public library that will give all its…

A: *Hi there , as per our guidelines we can only solve 1 question at a time . So we are solving…

Q: d) Suppose Congress approves a proposed "temporary worker" program and American firms find out that…

A: Dear student, you have asked multiple sub-part questions in a single post.In such a case, as per the…

Q: 1.) Use the rectangle drawing tool to shade in the revenue received by kumquat producers before the…

A: Total revenue is the overall amount of money earned by a firm or business from selling its goods or…

Q: Assume our complete 4-panel model of the economy in equilibrium at Y-full employment. If the Fed…

A: Full employment- It is an economic situation where all available labor resources are put to their…

Q: The histogram on the right displays the December 2000 percentage unemployment rates in the 51…

A: Here we are given the bar chart where on the horizontal axis we have the unemployment rate range and…

Q: On January 7th, 2009, due to a series of disputes between Russian and Ukrainian gas companies, all…

A: Aggregate supply curve shows how much output is supplied by firms at a given price level.

Q: The following table shows supply and demand schedules for the British pound. Assume that exchange…

A: An individual’s willingness to pay for each unit of the quantity he or she wishes to consume is…

Q: Businesses have different strategies for when a country is in a recession or an upswing. Do some…

A: ***This question has been solved by the expert in a general way.*** Many factors require being…

Q: Consider an economy with a labor force of 200 million people of which 180 million are employed while…

A: An employed individual alludes to an effectively taken part in paid individual work or gainful…

Q: Consider a scenario of a closed economy in the short run where price level is fixed. Assume that…

A: The purposeful acts and policies taken by governments or central banks to control and influence…

Q: Give only typing answer with explanation and conclusion 56. SUBSTITUTE AND COMPLEMENTARY COMMODITIES…

A: Market economics, sometimes known as libertarian economics, is a style of the economy in which the…

Q: Only typed answer and please don't use chatgpt Why will temporary tax increase be insignificant in…

A: Tax can be defined as a mandatory financial contribution imposed by the government on individuals,…

Q: Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse…

A: Joe's Demand function : p = 120 - 2q MC of rounds = 20 In two part tariff monopoly charges a per…

Q: a. Explain 5 export import regulations at Turkey with example.

A: Exports refer to the amount of goods and services that a nation sells to another nation. While…

Q: Consider the accompanying graph, which depicts the cost curves of a perfectly competitive seller of…

A: Profits, in the context of business and economics, refer to the financial gains or earnings obtained…

Q: Consider Bowles’ theory about the firm’s employment of labour for pursuing profit maximization.…

A: where, Q = output per hour, e = the amount of output per unit of work done, d = the amount of work…

Q: Suppose the inverse demand curve in a market is D(p) =a-bp, where D(p) is the quantity demanded and…

A: In this case, Stackelberg model is discussed. Stackelberg model is one type of model in which leader…

Q: You are managing a firm with market power, and you think the price elasticity of demand for your…

A: To find the price from marginal cost and price elasticity of demand, the formula is as follows,…

Q: 1.) Use the rectangle drawing tool to shade in the revenue received by kumquat producers before the…

A: An individual’s willingness to pay for each unit of the quantity he or she wishes to consume is…

Q: AlphaGas is a retail station which sells gasoline to consumers at the per-gallon price Pr. It is the…

A: Pr=20-2*Qr--- retail demand function (Alpha Gas) Pr-- retail price Qr--- retail quantity Production…

Q: D. List 2 (in numbers) 2 implicit costs that Jon has not included. E. What is Jon’s pure economic…

A: To calculate economic profit or loss we have to subtract implicit cost what Jon has foregone to set…

Q: Discuss the future of the international monetary system.

A: International monetary policy refers to the actions and strategies implemented by central banks and…

Q: 4. (a) Analyse how output and net exports are determined in the open economy. In doing so, in…

A: The nominal exchange rate is often quoted in financial markets and used for international trade,…

Q: The profit-maximizing quantity is Mayor George Bailey, concerned about water consumers, is…

A: A price ceiling refers to when the government sets the highest price that can get charged for some…

Q: Which statement about the price level is correct? A It fell over the first half of the period. B It…

A: The percentage change in the Consumer Price Index (CPI) is a measure that indicates the rate of…

Q: Draw the following four graphs with an economy experiencing an inflationary gap: money market,…

A: An inflationary output gap is a situation in which the actual output of an economy is greater than…

Q: sider the accompanying graph, which depicts the cost ves of a perfectly competitive seller of…

A: DISCLAIMER “Since you have asked multiple question, we will solve the first three question for you.…

Q: Solve with complete solution and draw the cash flow diagram A company is considering constructing a…

A: Since you have posted multiple questions, we will answer the first two questions for you. If you…

Q: Most systems of medical insurance substantially lower the out-of-pocket costs consumers have to pay…

A: Medical insurance is a type of coverage that provides financial protection against the cost of…

Q: Using the concept in Keynesian economics, which one of the following may not be an effective fiscal…

A: Fiscal policy refers to changes in taxes and government purchases to affect the aggregate demand…

Q: Find the marginal revenue for the firms that face the following demand curves: a. Q=1,000-5P…

A: Marginal revenue will be computed as a change in its total revenue divided with the change of its…

Q: i) Suppose that new entry decreased your demand elasticity from –2 to –3 (made demand more elastic).…

A: Demand elasticity, also known as elasticity of demand, is a measure of how demand responds to a…

Q: The Enrico Oil Company is deciding whether to drill for oil on a tract. The company estimates that…

A: Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or…

Q: Which one of the following is not a reason why import tariffs (duties or taxes) are imposed on…

A: Barriers to trade encompass multiple governmental regulations and procedures that restrict or hinder…

Q: Suppose that Mystic Energy and E-Storm are the only two producers of hydrogen fuel cells. The market…

A: In a monopoly market structure, There exists a single seller. The firm will produce where the…

Q: The following graph shows the short-run aggregate supply curve (AS), the aggregate demand curve…

A: Macroeconomic policymaking covers economic policy, financial policy, policy on trade, policy on the…

Q: NOTE: Each answer in this Section must draw on at least TWO readings specified in the module guide…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Explain what the ability bias is when estimating the returns to schooling. How does it affect the…

A: Ability bias refers to a potential distortion in estimating the returns to schooling due to…

Q: What is the value for net exports if consumer spending is $24,258, gross private domestic investment…

A: Given: Exports = $1,542 Imports = $2,447 As, Net Exports = Exports - Imports

Q: Consider an economy where the consumers buy widgets, cogs, and services. The CPI market basket…

A: Consumer Price Index- It is a tool used to measure the purchasing power of money and the inflation.…

Q: Consider the given simple economy. Sheepnip Co. makes sheep feed. Better-bald Inc. purchases sheep…

A: GDP stands for Gross Domestic Product. It is a measure used to quantify the economic activity and…

Q: Question Three a. Explain the role that the Balance of Payment plays to a country such as Zambia…

A: The Balance of Payments (BOP) is a record of all economic transactions that occur between a country…

Q: Which of the following action is a most likely fiscal policy measure for an economy that is in an…

A: Here, the GDP implies the value of all the commodities and services provided in the economy by the…

Concept explainers

Fiscal Policy and Money Market

Fiscal policy is one of the important tools that is used by the government to control inflation or aggregate demand in the economy. Under this policy, there are two rules which are used by the government, one is the expenditure of the government and the other is the taxation or income of the government which it collects from the public.

Question

4. The government decides to pursue a policy of keeping the amount of tax revenue it
collects to be a fixed amount. In terms of tax rates, is this policy pro-cyclical,
countercyclical, or neutral? Is this a good policy for the government to adopt?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Definition of tax revenue

VIEW

Step 2: Explanation

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

During the Great Recession of 20082009, what actions would have been required of Congress and the President had a balanced budget amendment to the Constitution been ratified? What impact would that have had on the unemployment rate?
What is the main advantage of automatic stabilizers over discretionary fiscal policy?
What is the main reason for employing contractionary fiscal policy in a time of strong economic growth?
Have the spending and taxes of the U.S. federal government generally had an upward or a downward trend in the last few decades?
Fiscal drag is where Select one: a.there is a lag in government spending having any effect. b.increases in nominal wages push taxpayers up tax brackets. c.increases in government spending hold back economic growth. d.taxpayers look for ways to avoid paying tax they perceive is unfair.
1 Assume the aggregate demand of an economy is rising at 3%, but its productive capacity is only rising at 2%. Discuss the type of inflation this would lead to. Use a diagram to motivate your answer. 2 Explain how fiscal policy can be implemented if an economy is in the downswing of a business cycle.
K Does the existence of credit market imperfections imply that there is a useful role for government tax policy? The existence of credit market imperfections imply that there is a useful role for government tax policy as it would be for the government to do so.
f Congress and the president decide an expansionary fiscal policy is necessary, then they should target higher interest rates by decreasing the money supply. enact policies that increase government spending and decrease taxes. Oenact policies that decrease government spending and increase taxes. O target lower interest rates by increasing the money supply. 2001-20 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Please using examples and clearly labeled graphs where applicable answer the following question clearly and detailed. The government decides to pursue a policy of keeping the amount of tax revenue it collects to be a fixed amount. In terms of tax rates, is this policy pro-cyclical, countercyclical, or neutral? Is this a good policy for the government to adopt?
(c) The Bank of England has a target of keeping inflation at 2%. Central banks around the world that target inflation have similar targets. Why are central banks content to see prices rise instead of trying to lower prices? (d) Pne common argument against discretionary fiscal policy is: "Since the economy returns to equilibrium, we should not react to the fluctuations in the economy. If we do nothing, the economy will fix itself." Critically evaluate this argument.
B44. What do you understand by cyclicality of the fiscal policy?
QUESTION The Cyclically Adjusted Budget Balance is an estimate of what the Fiscal Balance would be if _______________. a. Equilibrium GDP is greater than Potential GDP. b. The Equilibrium GDP is equal to Potential GDP. c. Equilibrium GDP is greater than Potential GDP. d. What the budget balance would be at the trough of the Business Cycle. QUESTION When the FED conducts monetary policy, it relies primarily on a. Direct targeting of the monetary aggregates such as M1 and M2 along with changes in consumer lending rates. b. Only consumer lending rates. c. Open market operations and changes in the fed funds rate. d. Only changes in the Fed funds rate. QUESTION Given the following data: Demand Deposits are equal to 1000, Time Deposits are equal to 500, Large Savings Accounts are equal to 300, and the public holds 50 in cash. If the Reserve Requirement on Demand Deposits is 10%, what is the Monetary Base? a. 100…