Overall, the evidence suggests that the output boost from the current fiscal response is likely to be large. Daniel J. Chodorow-Reich, Gabriel. Cloyne, James S. Congressional Budget Office. Ganong, Peter, and Pascal Noel. Leduc, Sylvain, and Daniel Wilson. Parker, Jonathan A. Souleles, David S. Johnson, and Robert McClelland. Ramey, Valerie A. Historical Data. Sahm, Claudia R.
Shapiro, and Joel B. Jeffrey R. Chicago: University of Chicago Press, pp. This publication is edited by Anita Todd with the assistance of Karen Barnes.
Permission to reprint must be obtained in writing. Box San Francisco, CA Skip to content Readability Tools. Reader View. Dark Mode. High Contrast. Reset All. Economic Research. Something forgotten is hired workers wages will be taxed back to the goverment via sales tax, income tax and other taxes. Unemployment Benefits: Its hard to understand why anyone would be against giving money to people who require it desperately but as per the tax cut example above they would likely either buy a good or service, pay off debt or save it.
This also has similar multiplier effects as tax cuts. The most important thing to consider is any new hires or "job saved" would actually have to pay income tax and likely sales tax back to the government. The businesses who have gained from the stimulus would likely have to pay taxes as well. So out of the Billion it would be likely that some would come back to the government. So in a sense those who say the government would "waste" this money shows a bit of irony since the public is in control of a significant portion of the stimulus.
The unemployment rate is very low and cannot go higher. The Federal Reserve Fed is meeting next week to assess economic conditions and set monetary policy.
Given the current economic situation, should the Fed adjust or not adjust economic policy? If so, how? If not, why? Recently, the Fed has allowed the money supply to expand beyond its long-term target range. Does this affect your expectation of what the Fed will decide at its upcoming meeting? Suppose the Fed has just learned that the Treasury will need to borrow a larger amount of funds than originally expected. Explain how this information may affect the degree to which the Fed changes the monetary policy.
Assume that the money multiplier equals 2. Which of the following means of financing federal government spending will increase the monetary base? Assume the Federal Reserve Board is undertaking an expansionary monetary policy. Explain the details of how the expansionary Fed impacts each of the following:. Under certain circumstances, expansionary Fed policy may not have much of an effect on the rate of economic growth.
Give a reason why, and explain? How does a stimulus program through the money multiplier affect the money supply? You have 0 free answers left. Get unlimited access to 3. Already have an account? Log in.
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