Because the size of the government is so fiscal policy has influence on the econ

Question

Because the size of the government is so fiscal policy has influence on the economy Large, positive Large, some Small, none Small, negative Tax revenue, from a policy standpoint, is a Discretionary fiscal policy tool Automatic fiscal policy tool Not effective in managing the economy The three main goals of macroeconomic decision makers are Income equality, low inflation, low taxes Economic growth, no unemployment, low taxes Income inequality, no inflation, predictable taxes Steady economic growth, low unemployment, low inflation If the economy is experiencing above potential output, The economy cannot produce above potential Contractionary fiscal policy may be warranted Expansionary fiscal policy may be warranted No fiscal policy is appropriate If the marginal propensity to save(MPS) is.2, the multiplier is:.2 2 5 10 If the government decides to buy 10,000 SDSU students a new Macbook for $1,000, GDP rises by $1000 $10000 $10,000,000 $10,000,000 Which of the following is a major issue using discretionary fiscal policy to correct the economy? Timing Window-dressing Deficits The feedback effect The stimulus package following the recession was an example of: Deficit spending Expansionary fiscal policy All of the above None of the above

Explanation / Answer

Q9.Government spending and tax collection exert considerable influence on the economy. The reason behind this is that level of government spending and tax collection is so large that it impacts, practically, each dimension of economy. Due to this large size of government, the policy of government with respect to government spending and tax collection (fiscal policy) tends to have positive effect on economy.

This positive effect implies that government can correct economic fluctuations by administering suitable fiscal policy.

Hence, the correct answer is option (a).

Q10. Tax revenue is a fiscal policy tool. However, tax revenue generally rises during the time of expansion and falls during the time of recession and thus adjust automatically without direct intervention of government.

Due to this automatic nature, tax revenue is also termed as automatic fiscal policy tool.

Hence, the coorect answer is option (b).

Q13. MPS = 0.2

Multiplier = 1/MPS = 1/0.2 = 5

The value of MUltiplier is 5.

Hence, the correct answer is option (c).

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