QUESTION 1 Changes in tax laws and deliberate government O a automatic fscal pol

Question

QUESTION 1 Changes in tax laws and deliberate government O a automatic fscal polcy change O b.structural monetary poliay change Oe. mandatory fiscal policy change O d discretionsary fiscal policy change purchases that are made to help the economy recover from a recession are known as 4 points Save Answer QUESTION 2 stimulus to aid recovery trom a recession wil be most effective in the long run _ O a.it begins gradually and increases as the economy approaches full employment. b it is accompanied by tight monetary policy from the central bank ??.itcan bereversed as the business cycle approaches the next peak. O d the effective fiscal muliplier is low enough to guarantee a strong crowding-out etfect. 4 points Save Answer QUESTION 3 and approaches the peak of a business cycle, which of the following tends to happen autormatically. without a specific change in polilcy? a. Inflation lowers the value of monetary assets and increases the value of real assets Ob.government expenditure declies Oe tax revenues go down under progressive income tax system O d.tax revenues go up under progressive income tax system QUESTION 4 4 points Save Answer In contrast to the ederal govemment budget of the US, the budgets of the individual states Oa have no effect on aggregate demand Ob are required by law to stay in balance, or fairty close to balance. O e have a strong automatic stabilizing eect over the business cycle. Od. can be kept in balance during reoession even without outs in services or tax increases QUESTION 5 4 points Save Answer If the central bank (Federal Reserve in case of USA) does not use accommodating monetary policy, a fiscal stimulus is likely to increase interest rates, which in turn wil cause parred investment to decrease, what is this sequence of events called? Your answer is Oa crowding out hypothesis Ob. Demand- pull inflation hypothesis Oe.natural rate hypothesis Od. structural unemployment hypothesis QUESTION 6 4points Save Answer Asituation in which the Fed holds interest rates constant 4at a low leve) iOrder to increase the effectiveness of fiscal stimulus is known as Oa monetary poilay that is non-oooperative and stringent Ob.non-accommodating monetary poliay action Oc. discretionary fscal poliay leading to greater govenment surplus Od.accommodating monetary policy action QUESTION 7 4points Save Answer Eements of fiscal policy that move the budget soward surplus as the economy expands and toward deficit as it contracts are called Oa. discretionary monetary policy actions Ob. automati stabilizers of fiscal policy

Explanation / Answer

1. d is correct

Discretionary fiscal policy is the change in tax and government spending to maintain the economy at full employment level.

2. a is correct

When fiscal change begins slowly and increases as economy approaches full employment, impact is high because then there will be less crowding effect.

3. a is correct

As the economy approaches the peak of the business cycle, price level starts to increase which lowers the value of money and increases the value of real assets.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

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