Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Which of the following statements are TRUE?
a) Automatic stabilizers, such a a progressive income tax and a full-fledged Negative Income Tax income assistance program would be much more successful at stabilizing the economy than our current discretionary policiy approach .
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b) To be effective, an expansionary fiscal stimulus policy should be comprised of permanent tax cuts or income assistance, but temporary increases in other government expenditures.
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c) The objective of an expansionary fiscal stimulus policy is to reduce short-term saving but not long-term saving, and if the policy includes government spending on goods and services the goal is to augment private spending not supplant it.
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d) How a government budget deficit accompanying expansionary fiscal stimulus is financed matters. Most effective is for central bank to finance the deficit (printing money), the worst is taxes.
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e) All the above
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