72. What is fiscal policy? a. Manipulating the money supply to achieve economic

Question

72. What is fiscal policy? a. Manipulating the money supply to achieve economic objectives b. Changes in govemment spending and taxation to achieve economic objectives c. Changes in investment policy by the Fed d. A lowering of the price level to achieve economic objectives 73. The business cycle exists due to a. Changes in exports b. Changes in aggregate demand, but not aggregate supply c. Changes in aggregate demand and aggregate supply d. Changes aggregate supply, but not aggregate demand 74. Which of the following would NOT cause an increase in long-run aggregate supply? a. Technological improvements b. Discovery of natural resources c. Investment in capital d. Increase in the exchange rate 75. What would happen if households drastically cut spending due to poor economic reports, other things constant? a. Aggregate demand would decline b. A negative output gap would occur c. Unemployment would decrease d. All of the above e. A and B above 76. Countercyclical policy are actions designed to a. Reduce the deficit during expansions b. Maintain high employment, stable prices, and economic growth c. Increase exports during recessions d. Any governmental action directed at ensuring political stability 77. If unemployment is above the natural rate, a correct mix of monetary and fiscal policy may be to a. Decrease the money supply and increase tax rates b. Decrease government spending and increase interest rates c. Increase the money supply and increase government spending d. Raise the discount rate and lower tax rates 78. How successful have policymaker's been at maintaining low inflation and low unemployment since WWI1? a. Very successful b. The economy has experienced low inflation since 1960 c. Unemployment has been relatively low since 1974 d. Recessions have continued to occur despite fiscal and monetary policy actions 79. The time it takes for an action taken by policymakers to impact the economy is an a. Inside lag b. Interest lag c. Outset lag d. Outside lag

Explanation / Answer

72) b - fiscal policy involves changing government revenues and expenditures.

73) b - changes in only aggregate demand.

Since the above are separate independent questions, I have answered only two.

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