Page 36 out of 17 Each Oatione0aly and the total wil be conted out of 100. 79) [
ID: 1130286 • Letter: P
Question
Page 36 out of 17 Each Oatione0aly and the total wil be conted out of 100. 79) [UNc] What generally happens to the unemployment rate in the times of recession? rate is usually higher at the times of recession ate is usually lower at the times of recession ) The expansion? 80) [IN,c] What happens to the inflation rate in the times of economic a) The inflation rate is usually higher at the times of expansion b) The inflation rate is usually lower at the times of expansion 81) [BC,c] Which of the following represents stagflation? a) An increase in inflation and an increase in real GDP 5 An increase in inflation and a decrease in real GDP c) A decrease in inflation and a decrease in real GDP d) A decrease in inflation and an increase in real GDP 82)[PA] Suppose that real GDP in a country is S 140 billion and the government purchases multiplier is 2. The government would like to bring the economy to potential real GDP, which is equal to 144 billion. The government contemplates to increase govemment purchases by $1 billion Will a $1 billbon increase in government purchases be enough to bring the economy to potential real GDP a) Yes, the increase in govenment purchases will bring real GDP to exactly potential real GDP b) Yes, the increase in government purchases will bring real GDP to a level above potential real GDP c) No, the increase in government purchases will bring real GDP to a level below potential real GDP d) None of the above. 83) Define federal budget deficit a) The situation in which govermment expenditures are equal to tax revenues b) The situation in which government expenditures are less than tax revenues. The situation in which the foderal government debt is higher than 60 percent of GDP The situation in which government expenditures are greater than tax revenue. 84) What is another name for government spending and taxes that automatically change during the business cycle? a) Automatic stabilizers b) Discretionary fiscal policy c) Automatic fiscal policy d) Discretionary monetary policy e) Automatic monetary policy 85) [FPc] Why does the budget deficit increase during recessions? )Higher unemployment lowers the amount collected in income tax and increased b) Higher unemployment increases the amount collected in income tax and increased e) Lower unemployment increases the amount collected in income tax and decreased d) Lower unemployment lowers the amount collected in income tax and decreased t benefits increases govermment expenditures unemployment benefits decreases govermment expenditures unemployment benefits increases the government expenditure unemployment benefits decreases the govenment expenditure Please, keep your eyes on your copy of the test and do not look in the direction of anyone's test.Explanation / Answer
80) Option a - inflation is usually higher at the times of expansion
82) Option c
Increase in real GDP = multiplier x increase in government spending = 2 x 1 = $ 2 bn
New real GDP = 140 + 2 = $ 142 bn
84) Option a is correct (Automatic stabilizers)
85) Option a is correct (During recession, higher unemployment decreases tax revenue and increases government spending)
Other solutions are correct
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.