QUESTION 32 The automatic stabilization effect of fiscal policy refers to the fa

Question

QUESTION 32 The automatic stabilization effect of fiscal policy refers to the fact O taxes tend to become more progressive during economic expansions taxes tend to become more regressive during economic expansions O inflation tends to go up during economic expansions O government spending tends to go down during economic expansions QUESTION 33 According to the Keynesian view of macroeconomics, what should be the role of the government as far as economic policy? The government should keep the growth rate of the money supply stable O The government should maintain a fixed interest rate The government should try to raise the AS curve O The government should try to stabilize the AD curve QUESTION 34 About how much of the world's income goes to the poorest 40 percent of households? O Less than 1 percent Slightly more than 3 percent Between 12 and 13 percent O About 22 percent QUESTION 35 How does the Federal Reserve affect the supply of money using open market operations? The Fed increases interest rates and then prints more money so that borrowers will be able to pay the higher rates The Fed sells government bonds, which increases aggregate demand and requires more money to be printed. The Fed buys government bonds from banks, which increases the banks reserves with the Fed and allows them to make new loans O O The Fed increases the reserve requirements of bank and thus banks must obtain additional funds from the Fed.

Explanation / Answer

32.Ans: government spending tends to go down during economic expansions

33.Ans: govt should keep the growth rate of money supply stable.

34.Ans: About slightly more than 3%

35.Ans: The Fed buy govt bonds, which increases the banks reserves with the Fed and allows them to make new loans.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.