Examples
The Supplemental Nutrition Assistance Program (SNAP), a program that provides financial assistance to low-income individuals, is an example of what in fiscal policy? Bonus (100): is SNAP from the expenditure or the revenue side?
What is an automatic stabilizer
This economist argued in favor of expansionary fiscal policy during recessions, especially during the Great Depression.
Who is John Maynard Keynes.
How does expansionary fiscal policy affect aggregate demand? Use AG equation to explain.
What is it directly increases government spending and decreases taxes which increase consumption because of increased funds.
In the early 1980s, the U.S. govt adopted expansionary fiscal policy by increasing military and defense spending while implementing tax cuts. In response, the loanable funds market demand increased and interest rates rose. Companies chose to delay or cancel their investments in factories, equipment, etc. This is an example of what phenomenon. BONUS (100): describe what happened in terms of the IS-LM-PC model in the short run
What is the crowding out.
During the Trump administration, the Tax Cuts and Jobs Act (TCJA) was implemented. This bill is largely regarded as suboptimal fiscal policy. Why?
What is it was not targeted accurately. It gave large corporations tax cuts with the hopes that they would reinvest that money into their business, but they ended up using it for stock buybacks.
Why is it important to have counter cyclical fiscal policy?
In 2020, the U.S. passed this act to provide economic relief during the pandemic which was an example of expansionary fiscal policy.
What is the CARES Act.
What is the Inflation Reduction Act and CHIPS & Science Act.
Some argue that we need to worry about debt for long-term economic growth because a study found that borrowing hurts borrowing hurts growth because it decreases investment by what percentage?