34. Discretionary fiscal policy refers to A) deliberate government efforts to stabilize the economy through government spending and taxes. B) the use of automatic stabilizers and intervention policies to stabilize the economy. C) any government policy that requires a lag period of at least three months. D) the deliberate use of government spending and taxes to complement the effects of monetary policy in an effort to stabilize the economy. 35. An inflationary gap can be closed with A) using an expansionary monetary policy. B) using a policy action such as a reduction in taxes. C) using a policy action such as a reduction in government purchases. D) imposing price controls to prevent prices from rising. 36. The term “crowding out” refers to the phenomenon that occurs when increased government spending A) raises the price level and reduces consumption. B) leads to higher interest rates which reduces private investments. C) leads to higher bond prices which decreases the demand for Treasury bonds. D) leads to increased budget deficits that ultimately warrant increases in income taxes.
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34. |
Discretionary fiscal policy refers to |
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A) |
deliberate government efforts to stabilize the economy through government spending and taxes. |
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B) |
the use of automatic stabilizers and intervention policies to stabilize the economy. |
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C) |
any government policy that requires a lag period of at least three months. |
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D) |
the deliberate use of government spending and taxes to complement the effects of |
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35. |
An inflationary gap can be closed with |
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A) |
using an expansionary monetary policy. |
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B) |
using a policy action such as a reduction in taxes. |
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C) |
using a policy action such as a reduction in government purchases. |
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D) |
imposing |
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36. |
The term “crowding out” refers to the phenomenon that occurs when increased government spending |
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A) |
raises the price level and reduces consumption. |
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B) |
leads to higher interest rates which reduces private investments. |
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C) |
leads to higher |
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D) |
leads to increased budget deficits that ultimately warrant increases in income taxes. |
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