8. Using policy to stabilize the economy The government has the ability to influence the level of output in the short run using monetary and fiscal policy. There is some disagreement as to whether the government should attempt to stabilize the economy. Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president. Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates. Businesses make investment plans many months in advance. Which of the following are examples of automatic stabilizers? Check all that apply. The discount rate Unemployment insurance benefits The federal funds rate

8. Using policy to stabilize the economy The government has the ability to influence the level of output in the short run using monetary and fiscal policy. There is some disagreement as to whether the government should attempt to stabilize the economy. Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president. Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates. Businesses make investment plans many months in advance. Which of the following are examples of automatic stabilizers? Check all that apply. The discount rate Unemployment insurance benefits The federal funds rate

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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37. What happens when the government temporarily runs a deficit by spending more on public stimulus without raising taxes? The aggregate supply curve will shift to the right but only in the short run. The aggregate demand curve moves to the right. The aggregate supply curve will shift to the right but only in the long run. The aggregate demand curve moves to the left.
B. Move the Economy back to Potential GDP C. Do nothing D. Decrease Inflation, Lower Interest Rates, Increase Spending 33. If an Economy is producing below Potential GDP, the correct form of action is: A. Expansionary Monetary Policy combined with Contractionary Fiscal Policy B. Contractionary Monetary Policy combined with Expansionary Fiscal Policy C. Expansionary Monetary Policy or Expansionary Contractionary Policy or some Combination of both D. Contractionary Monetary and Fiscal Policy in the Same Amounts xt Predictions: On Editor Suggestions: Showing Et P + 51°
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The economy is experiencing negative GDP growth and high unemployment. Which fiscal policy action should the government implement in an attempt to fix this problem? A.) increase spending B.) raise taxes C.) increase the reserve requirement D.) decrease interest rates
8. Using policy to stabilize the economy The government possesses the tools necessary to influence the output level in the short run through use of monetary and fiscal policy. However, there is some debate regarding whether the government should attempt to stabilize the economy. Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. The current tax system acts as an automatic stabilizer. Businesses make investment plans many months in advance. Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president. Which of the following policies are examples of automatic stabilizers? Check all that apply. Personal income taxes The discount rate The federal funds rate
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What is a default on the national debt? A. The Federal Reserve purchases Treasurys issued by the federal government. B. The federal government buys back its own debt from the holders of United States Treasuries by having the Treasury print money. C. The holders of United States Treasurys forgive the debt and provide the government with cash. D. The federal government declares bankruptcy or restructures the payments on its debts with the lenders.
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