Please answer the following questions: 1. Discretionary fiscal policy is the direct result of deliberate actions by policy makers rather thanan automatic adjustment.A. TrueB. False2. Discretionary government spending is an automatic stabilizer.A. TrueB. False3. Fiscal policy refers to the:A. changing the money supply to impact the economy.B. policies to positively impact the environment.C. policies design to achieve a balanced budget.D. manipulation of government spending and taxes to stabilize domestic output, employment,and the price level.E. manipulation of government spending and taxes to achieve greater equality in the distributionof income.4. Which factor is NOT a tool of fiscal policy?(Select All that Apply)A. changing the tax ratesB. government purchases of goods and servicesC. changes in the money supplyD. changes in the interest rate to affect the moneysupply5. A contractionary fiscal policy is one that reduces aggregate demand by decreasing:A. government purchases.B. the money supply.C. interest rates.D. taxes.6. If the economy exhibited an inflationary gap, the government should follow a(n)which would shift the AD curve to theA. expansionary; rightB. contractionary; rightC. expansionary; leftD. contractionary; leftpolicy, 14. The economy starts out with a balanced Federal budget. If the government opts to implementexpansionary fiscal policy, then there will be a:A. Trade deficitB. Trade surplusC. Budget deficitD. Budget surplusE. Balanced Federal Budget15. As the economy declines into recession, the collection of personal income tax revenuesautomatically falls. This relationship best describes how the progressive income tax system:A. serves as a discretionary fiscal policyB. have no effect in the economyC. will help discourage spendingD. converts a recession into a depressionE. serves as an automatic stabilizer for the economyMATCHINGWith regards to time lags (shortcomings of discretionary fiscal policy), match the following:16. Recognition Lag17. Administrative Lag18. Operation LagA. the time it takes for discretionary fiscalpolicy to impact the economy.B. start of the recession and the time it takesto recognize that the recession has started.C. the time the need for the fiscal action isrecognized and the time that the action istaken.

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1. Discretionary fiscal policy is the direct result of deliberate actions by policy makers rather than an automatic adjustment. A. True B. False 2. Discretionary government spending is an automatic stabilizer. A. True B. False 3. Fiscal policy refers to the: A. changing the money supply to impact the economy. B. policies to positively impact the environment. C. policies design to achieve a balanced budget. D. manipulation of government spending and taxes to stabilize domestic output, employment, and the price level. E. manipulation of government spending and taxes to achieve greater equality in the distribution of income.