Automatic stabilizers refer to the money supply and interest rates that automatically increase or decrease along with the business cycle. government spending and taxes that automatically increase or decrease along with the business cycle. changes in the money supply and interest rates that are intended to achieve macroeconomic policy objectives. changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives.

Automatic stabilizers refer to the money supply and interest rates that automatically increase or decrease along with the business cycle. government spending and taxes that automatically increase or decrease along with the business cycle. changes in the money supply and interest rates that are intended to achieve macroeconomic policy objectives. changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 2SQ

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Active policy making refers to nondiscretionary policy making. relying on policies that act as automatic stabilizers. actions taken by policy makers in response to or in anticipation of some change in the overall economy. policy making that is carried out in response to a rule.
Fiscal policy refers to changes in Group of answer choices federal taxes and purchases that are intended to fund the war on terrorism. the money supply and interest rates that are intended to achieve macroeconomic policy objectives. federal taxes and purchases that are intended to achieve macroeconomic policy objectives. state and local taxes and purchases that are intended to achieve macroeconomic policy objectives.
Which statement below is NOT true regarding government intervention in the economy? Progressive income tax is a form of automatic stabilizer. If the economy is doing badly, the government should cut spending to improve it. Most suggest that government should promote macroeconomic stability. Unemployment insurance is an automatic economic stabilizer.
Fiscal policy attempts to achieve all of the following macroeconomics objectives EXCEPT, A) sustained economic growth. B) a stable money supply. C) full employment. D) price level stability.
An automatic stabilizer is a feature of the economy that
Label each of the following scenarios in which there are problems enacting and applying fiscal policy as being an example of either recognition lag, administrative lag, or operational lag. To fight a recession, Congress has passed a bill to increase infrastructure spending but the legally required environmental impact statement for each new project will take at least two years to complete before any building can begin. Distracted by a war that is going badly, politicians take no notice until inflation reaches 8 percent. A sudden recession is recognized by politicians, but it takes many months of political deal making before a stimulus bill is finally approved. To fight a recession, the president orders federal agencies to get rid of petty regulations that burden private businesses – but the federal agencies begin by spending a year developing a set of regulations on how to remove petty regulations.
Fiscal policy is a plan for taxing and spending that is designed to steer an economy in a desired direction True False
Which of the following statements about automatic stabilizers in Canada is the most accurate? They are the responsibility of the provinces since they, unlike the federal government, do not face lag problems. They are controlled by the Bank of Canada to help manage the business cycle. They are able to completely eliminate all the lag problems associated with fiscal policy. They are changes in government transfer payments and tax revenues that vary automatically and inversely to business cycle changes.
Automatic stabilizers: A) counteract both recessions and expansions through changes in spending without government action. B) are government programs to employ workers during recessions. C) create government budget surpluses during economic recessions. D) are designed to reduce the price level directly.
The various kinds of automatic stabilizers are: Group of answer choices Expansionary Monetary Policy All of them Taxes and Transfer payments Increased Defense spending
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. 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. Which of the following policies are examples of automatic stabilizers? Check all that apply. Corporate income taxes Personal income taxes The federal funds rate
Suppose that the government decreases spending more than is necessary to close an inflationary gap. What is the MOST likely result? Inflation will increase. The price level will increase. Aggregate output will fall short of potential output. Aggregate output will increase.