5. Which of the following is an automatic stabilizer in the economy? a. Spending

Question

5. Which of the following is an automatic stabilizer in the economy? a. Spending on national defense b. Provision of unemployment compensation c. Spending on education d. Provision of Social Security and Medicare 6. Which of the following is the definition of government expenditures? a. Money the government spends to buy goods and services b. An itemized summary of probable government revenue and expenses for a given period c. Central bank actions using interest rate or money supply tools to achieve goals such as stable prices, maximum employment, and moderate long-term interest rates d. The total market value, expressed in dollars, of all final goods and services produced in an economy in a given year 7. If government is increasing spending and decreasing taxes, what type of policy is it conducting? a. Expansionary monetary policy b. Contractionary monetary policy c. Contractionary fiscal policy d. Expansionary fiscal policy 8. To calculate real gross domestic product (GDP), gross domestic product must be adjusted for which variable? a. Population b. Inflation c. Deficit d. Debt 9. Which of the following is a severe and long-lasting economic downturn that is worse and deeper than a recession? a. A contraction b. The business cycle c. An expansion d. A depression 10. Congress might lower taxes if the economy appears to be in a. a period of expansion. b. a recessionary period. c. a period of increased employment. d. a period of increasing GDP. 11. Which of the following best defines inflation? a. The rapid increase in the price of a specific good, such as gasoline b. A general, sustained upward movement of prices for goods and services in an economy c. The fluctuation in revenue and expenditures caused by Congress and the president d. An increase in the national debt caused by ongoing deficit spending 12. Which of the following is a significant decline in general economic activity over an extended period that includes declining real income and rising unemployment? a. A business cycle b. A recession c. A bubble d. A transfer program 13. Which of the following is true of active fiscal policy actions? a. Policymakers can pinpoint the economic outcomes of their policies. b. The political process makes it easy to pass needed actions in times of economic crisis. c. Economic conditions will stay the same without policymaker action. d. It is often difficult for policymakers to know whether policies had any impact on the economy. 14. If the unemployment rate is declining, the economy is likely experiencing which one of the following? a. A recession b. An expansion c. A depression d. A contraction
5. Which of the following is an automatic stabilizer in the economy? a. Spending on national defense b. Provision of unemployment compensation c. Spending on education d. Provision of Social Security and Medicare 6. Which of the following is the definition of government expenditures? a. Money the government spends to buy goods and services b. An itemized summary of probable government revenue and expenses for a given period c. Central bank actions using interest rate or money supply tools to achieve goals such as stable prices, maximum employment, and moderate long-term interest rates d. The total market value, expressed in dollars, of all final goods and services produced in an economy in a given year 7. If government is increasing spending and decreasing taxes, what type of policy is it conducting? a. Expansionary monetary policy b. Contractionary monetary policy c. Contractionary fiscal policy d. Expansionary fiscal policy 8. To calculate real gross domestic product (GDP), gross domestic product must be adjusted for which variable? a. Population b. Inflation c. Deficit d. Debt 9. Which of the following is a severe and long-lasting economic downturn that is worse and deeper than a recession? a. A contraction b. The business cycle c. An expansion d. A depression 10. Congress might lower taxes if the economy appears to be in a. a period of expansion. b. a recessionary period. c. a period of increased employment. d. a period of increasing GDP. 11. Which of the following best defines inflation? a. The rapid increase in the price of a specific good, such as gasoline b. A general, sustained upward movement of prices for goods and services in an economy c. The fluctuation in revenue and expenditures caused by Congress and the president d. An increase in the national debt caused by ongoing deficit spending 12. Which of the following is a significant decline in general economic activity over an extended period that includes declining real income and rising unemployment? a. A business cycle b. A recession c. A bubble d. A transfer program 13. Which of the following is true of active fiscal policy actions? a. Policymakers can pinpoint the economic outcomes of their policies. b. The political process makes it easy to pass needed actions in times of economic crisis. c. Economic conditions will stay the same without policymaker action. d. It is often difficult for policymakers to know whether policies had any impact on the economy. 14. If the unemployment rate is declining, the economy is likely experiencing which one of the following? a. A recession b. An expansion c. A depression d. A contraction
5. Which of the following is an automatic stabilizer in the economy? a. Spending on national defense b. Provision of unemployment compensation c. Spending on education d. Provision of Social Security and Medicare 6. Which of the following is the definition of government expenditures? a. Money the government spends to buy goods and services b. An itemized summary of probable government revenue and expenses for a given period c. Central bank actions using interest rate or money supply tools to achieve goals such as stable prices, maximum employment, and moderate long-term interest rates d. The total market value, expressed in dollars, of all final goods and services produced in an economy in a given year 7. If government is increasing spending and decreasing taxes, what type of policy is it conducting? a. Expansionary monetary policy b. Contractionary monetary policy c. Contractionary fiscal policy d. Expansionary fiscal policy 8. To calculate real gross domestic product (GDP), gross domestic product must be adjusted for which variable? a. Population b. Inflation c. Deficit d. Debt 9. Which of the following is a severe and long-lasting economic downturn that is worse and deeper than a recession? a. A contraction b. The business cycle c. An expansion d. A depression 10. Congress might lower taxes if the economy appears to be in a. a period of expansion. b. a recessionary period. c. a period of increased employment. d. a period of increasing GDP. 11. Which of the following best defines inflation? a. The rapid increase in the price of a specific good, such as gasoline b. A general, sustained upward movement of prices for goods and services in an economy c. The fluctuation in revenue and expenditures caused by Congress and the president d. An increase in the national debt caused by ongoing deficit spending 12. Which of the following is a significant decline in general economic activity over an extended period that includes declining real income and rising unemployment? a. A business cycle b. A recession c. A bubble d. A transfer program 13. Which of the following is true of active fiscal policy actions? a. Policymakers can pinpoint the economic outcomes of their policies. b. The political process makes it easy to pass needed actions in times of economic crisis. c. Economic conditions will stay the same without policymaker action. d. It is often difficult for policymakers to know whether policies had any impact on the economy. 14. If the unemployment rate is declining, the economy is likely experiencing which one of the following? a. A recession b. An expansion c. A depression d. A contraction

Explanation / Answer

Answer 5 The answer is c) i.e Spending on Education is an automatic stabilizer in an economy. This is because as the name suggests there is no government intervention in the economy to stabilize its fluctuations when Automatic stabilizers come into force. And Spending on education is thus an automatic stabilizer which can automatically correct the imbalances and deficits/surpluses in an economy.

Answer 6 The answer is a) i.e Government Expenditure is money the government spends to buy goods and services.

Answer 7 The answer is d) i.e Expansionary Fiscal Policy. This is because:

Expansionary fiscal policy is defined as an increase in government expenditures and/or a decrease in taxes that causes the government's budget deficit to increase or its budget surplus to decrease. Thus if the government is increasing spending and decreasing taxes, then it is conducting an expansionary Fiscal Policy.

Answer 8 The answer is b) Inflation. This is because The Gross Domestic Product(GDP) at the outset does not take into account that how much the level of prices has increased as compared to the last year. Hence we do not know whether the increase in GDP is due to more goods and services produced in that year or whether the increase is partially due to the increase in prices. Hence we remove the impact of Inflation and hence find Real GDP.

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

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