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How will a decrease in government spending effect a static economy?
Wiki User
∙ 15y ago
I don't think there is a static economy. The economy is dyanmic. Things can always change. If the government uses up less resources there would me more for the private sector to use. Government doesn't produce anything. It can only take it from one person and then give it to another person after the cost of all the red tape.
Wiki User
∙ 15y ago
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Which action has an expansionary effect on the economy?
Increasing government spending
In an aggregate demand-aggregate supply diagram what will equal decreases in government spending and taxes do?
No effect. Spending will decrease Aggregate Demand, lower taxes will raise Aggregate Demand
How has the economy of the US changed?
The U.S. government influences the economy by guiding the overall pace of economic activity. Adjustments in spending and tax rates, managing the money supply, and creating jobs are all ways that the federal government has a powerful effect on the U.S. economy.
Why a cut in government spending has a larger effect under a fixed exchange rate system and perfect capital mobility than in a closed economy?
fixed and floating exchange rates
What effect did fords economic policy have on and the economy?
Inflation went down due to spending cuts
What is the effect on the government when the economy is in decline?
prices rise
Explain movements along the aggregate demand curve and shifts of the aggregate demand curve?
Movements along the aggregate demand curve are caused by changes in price level - real wealth effect, interest rate effect and open economy effect. If some non-price level determinant causes total spending to increase/decrease then the curve will shift to the right/left - consumption, investment, government expenditure, net exports.
Will a lower temp rated thermostat have any effect on fuel economy?
No, it could actually decrease fuel economy by decreasing the oil viscosity.
PowerPoint of lack of computer security and its effect on industryeconomy and government?
Powerpoint of lack of security of computer and its effect on industry,economy and government
What were the effects of trade in the renaissance?
The effects of trade has an effect on the economy and the government.
What effect did Ford's WIN strategy have on the economy?
Inflation went down due to spending cuts, but unemployment was still a problem.
Why the government spending multiplier is different form the tax multiplier?
The government spending multiplier is different form the tax multiplier from the top of my head is because the government spending total effect ripples off. That is if government spending increase then the total income increases. When total income increase, consumption increases, when consumption increases total income increases further (as consumption is a factor of total income), and this pattern is carried forward. This is the the multiplier effect, such that an increase in government spending's final impact on income is much bigger than its initial increase. The tax multiplier on the other hand, has a much smaller effect than government spending. This is because tax is only a portion of the consumer income. That is, if there is a tax cut, consumers only save a fractional amount (specifically 1-MPC) of a tax cut. As a result of the smaller boost in spending form ma tax cut, the ripples/multiplier effect of a tax cut is much less than an increase in government spending.
