Question

Education accounted for what percentage of Michigan state expenditures in 2017? (1 point)

14%


16%


30%


27%

The opposite of expansionary fiscal policy is typically called contractionary fiscal policy. Economically, what is the most typical reason that a government would want to engage in contractionary fiscal policy? Explain.(1 point)


Since expansionary fiscal policy can cause tension with neighboring countries, a government might want to engage in contractionary fiscal policy to reduce that tension.


Since expansionary fiscal policy can restrict trade, a government might want to engage in contractionary fiscal policy to increase trade.


Since expansionary fiscal policy can increase inflation, a government might want to engage in contractionary fiscal policy to reduce inflation.


Since expansionary fiscal policy tends to be wildly unpopular with voters, a government might want to engage in contractionary fiscal policy to increase the administration's chances of holding onto governmental power.

If the government gives a cash subsidy to members of a special interest group, explain how that indirectly harms members of the general public?(1 point)
Responses

The government could have given the money to a different special interest group instead.

Special interest groups generally have opinions that are unfavorable or even harmful to members of the general public. Supporting those groups will most likely cause some form of harm to the general public.

Special interest groups are generally composed of mostly foreign nationals. The money given to the special interest group could have been given to citizens instead.

The money given to the special interest group could have been given to everyone in the country equally.

How do the instances when expansionary fiscal policy should be used compare with those for contractionary fiscal policy?(1 point)
Responses

Expansionary fiscal policy should be used during recessions to help build the economy and contractionary fiscal policy should be used when there is high inflation.

Expansionary fiscal policy should be used to combat high inflation and contractionary fiscal policy should be used to increase government revenue.

Expansionary fiscal policy should be used to increase government revenue and contractionary fiscal policy should be used to increase consumer spending.

Expansionary fiscal policy should be used to decrease the unemployment rate and contractionary fiscal policy should be used when economic growth is too fast.

Answer 1

Education accounted for 27% of Michigan state expenditures in 2017. The most typical reason for a government to engage in contractionary fiscal policy is to reduce inflation. Giving a cash subsidy to a special interest group indirectly harms members of the general public.

Step-by-step explanation:

The percentage of education accounted for in Michigan state expenditures in 2017 was 27%.

The most typical reason for a government to engage in contractionary fiscal policy is to reduce inflation. Expansionary fiscal policy can cause inflation to increase, so contractionary fiscal policy is used to counteract this by decreasing aggregate demand through cuts in government spending or increases in taxes.

If the government gives a cash subsidy to members of a special interest group, it indirectly harms members of the general public because the money given to the special interest group could have been used for other purposes, such as giving subsidies to all citizens equally or investing in infrastructure, education, or healthcare, which would benefit the general public as a whole.

The instances when expansionary fiscal policy should be used are during recessions to help build the economy, decrease unemployment, and increase consumer spending. On the other hand, contractionary fiscal policy should be used when there is high inflation to reduce inflation and decrease government spending.