Identify each of the following events as: a) part of an expansionary fiscal policy b) part of a contractionary fiscal policy c) part of an expansionary monetary policy d) part of a contractionary monetary policy i. the corporate income tax rate is increased. ii. defense spending is increased. iii. families are allowed to deduct all daycare expenses from their federal income taxes. iv. the individual income tax rate is decreased. v. the federal reserve bank buys treasury securities. 4. assume the federal government runs a budget deficit in the current fiscal year. i. how can the federal government fund the deficit? ii. if the federal government decides to issue u. s. treasury securities to fund the deficit, what happens to the level of national debt, all else held constant? iii. assuming the federal government and firms compete for the same savers’ dollars in the loanable funds market, what is likely to happen to interest rates? iv. given your answer in (iii) above, is crowding out more or less likely to occur if the deficit is funded by treasury securities? explain.

answer; functional fixedness;

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.