Posted: October 23rd, 2022

ITT of Indianapolis ES 2560 – Module 5 Monetary and Fiscal Policies

ES2560: Module 5 Monetary and Fiscal PoliciesDiscussion 5.1Discretionary Fiscal PolicyThe purpose of this assessment is to identify example(s) of direct expenditure offset to fiscal policy and theexample(s) of fiscal stabilizer(s).Imagine the government starts offering free meals to college-going students. It may reduce private spendingbut increase government spending. This is an example of direct expenditure offset to fiscal policy.Similarly, during recession, the tax rate for super rich increases as compared to other citizens. This is anexample of automatic stabilizer.Based on these examples, discuss which of the following are examples of direct expenditure offset to fiscalpolicy and which are the examples of automatic fiscal stabilizer. Provide a rationale for your selection.As the economy starts to recover from a severe recession and more people go back to work,government-funded unemployment compensation payments begin to decline.In an effort to help rejuvenate the nation’s railroad system, a new government agency buys unusedtrack, locomotives, and passenger and freight cars, many of which private companies wouldotherwise have purchased and put into regular use.A government agency arranges to make loans to businesses whenever an economic downturnbegins.As the economy heats up, the resulting increase in equilibrium real GDP immediately results inhigher income tax payments, which dampen consumption spending somewhat.The government increases its expenditures without raising taxes. To cover the resulting budgetdeficit, it borrows more funds from the private sector, thereby pushing up the market interest rateand discouraging private planned investment spending.The government finances the construction of a classical music museum that otherwise would neverhave received private funding.To stem an overheated economy, the president, using special powers granted by Congress,authorizes emergency impoundment of funds that Congress had previously authorized for spendingon government programs.1ES2560: Module 5 Monetary and Fiscal PoliciesDiscussion 5.1Discretionary Fiscal PolicyWhich points were easy to identify and which were comparatively difficult? For the difficult ones, analyzeand discuss what confused you.Participation Requirements:Respond to at least two of your classmates. When responding:Provide complete, well-thought-out responses.Ask questions, share experiences, challenge ideas, and help your peers expand their responses.Your responses must show how you have learned more about a concept or a post from anotherstudent. This can be done in a number of different ways. The following are examples of posts thatshow learning and growth throughout the discussion:o Share what resources you checked in an attempt to clarify your doubts regarding the topic.oAsk one to two new questions related to the discussion topic to your instructor or yourpeers.oShare why you chose to comment on particular answers posted on the forum. Did you learnanything new from the answers of your peers?oDid you find any peers’ answer contradictory to your understanding of the topic? What newquestions does it bring to your mind about the topic?oShare one misconception that you had before you participated in this discussion forum.oWhat specific content idea you liked from the book helped you answer this discussionquestion?oWere there any other resources that explained the concept better than the book? How?Note: One-sentence answers will not be sufficient. If your answer is “I agree” or “I disagree,” explain whyyou agree or disagree. Remember that a discussion is an opportunity to interact with your fellow classmatesand to gain from sharing critical and analytical thinking. Observe discussion etiquette: Be respectful, kind,and nonjudgmental of your classmates.2ES2560: Module 5 Monetary and Fiscal PoliciesDiscussion 5.1Discretionary Fiscal PolicyEvaluation Criteria:The Discussion assessment will be evaluated using the following criteria:Did you identify the correct examples of direct expenditure offset to fiscal policy and automaticfiscal stabilizer?Did you cover all the examples in your discussion?Did you discuss which examples were easy to identify and which were difficult?Did you share what confused you for the examples you found difficulty to identify?Did you use macroeconomic terminologies in your discussion wherever possible?3

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