44. Contractionary fiscal policy involves decreasing government purchases or inc

Question

44. Contractionary fiscal policy involves decreasing government purchases or increasing taxes. A) TRUE B) FALSE 45. Congress and the president carry out fiscal policy through changes in A) interest rates and the money supply B) taxes and the interest rate. C) government purchases and the money supply. D) government purchases and taxes. 46. Expansionary fiscal policy involves A) increasing government purchases or decreasing taxes B) increasing taxes or decreasing government purchases. C) increasing the money supply and decreasing interest rates. D) decreasing the money supply and increasing interest rates. 47. Hyperinflations occur because governments want to spend more than they raise in taxes they pay for the extra purchases by printing money. A) TRUE B) FALSE

Explanation / Answer

44) The asnwer is A -) TRUE.

because, the contractionary fiscal policy are used to reduced the aggregate demand in the economy, and to do so by increase in taxes or decreasing in government spending.

45) THe answer is D-) government purchases and taxes.

because fiscal policy are policy which are used by government , and two components of fiscal policy are government spending or purchase and taxes.

46) The asnwer is A-) Increasing government purchases or decreasing taxes.

because expansionary fiscal policy is used to increase the aggregate demand in the economy. hence it can be done through by increase govenrment purchases or decrease taxes.

47) TRUE

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