The Laffer curve is a central component of O a) countercyclical monetary policy. O b) the new classical critique of fiscal policy. Oc) demand-side economics. O d) countercyclical fiscal policy. O e) supply-side economics.
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- × My Lectures Which statement is INCORRECT? our federal government. The policy mix is the combination of tax and spending policy of O The best policy mix to reduce raging inflation is a combination of contractionary monetary and fiscal policy. US, monetary and fiscal policy are determined independently of one another. Reserve and the president and congress disagree, then it is possible In the If the Federal O Contractionary fiscal policy is when the president and congress raise income taxes for monetary policy to be contractionary while fiscal policy is expansionary spending. or cut governmentWhich of the following could NOT be expansionary fiscal policy tool? A )increasing money supply B) 3 ) increasing government expenditure O c) decreasing taxes O D) increasing transfer paymentsChapter 18: Alternative Perspectives on Stabilization Policy Question: Some economists favour passive policy because of their: belief that shocks to modern economies are not large enough to require any policy response. O b. doubt that the correct policy will be implemented at the correct time. Oc. preference for using monetary policy rather than fiscal policy for stabilization. d. view that policy made by rules is superior to policy made by discretion. O e. view that policy responses will never be sufficient enough to eliminate the impacts of shocks.
- When the economy is in a recession, the government can use expansionary iscal policy to stimulate and encourage économic growth. Which of the following scenarios represent expansionary fiscal policies from both a supply perspective and a demand perspective? Choose one or more: OA The Federal Reserve increases the money supply and lowers the interest rate while the government simultaneously reduces future taxes. OB. The government lowers tax rates and issues a partial refund of taxes that have already been paid. OC The government raises tax rates and reduces payments of unemployment benefits. OD The government lowers tax rates and undertakes a replacement.of old bridges and roads. Suppose that, during a recession, the government borrows money to provide free wireless Internet access in urban areas. Whichof the following statements are correct? Choose one or more: RA This policy will likely be accompanied by an impact lag as the policy takes time to make its way to the people. O B. The…Which of the following is not a weakness of fiscal policy? O a. Fiscal policy might have undesirable long-term effects on short-run aggregate supply. b. Time lags in fiscal policy are long and variable. c. Fiscal policy works only during periods of stagflation. O d. Implementation of policy is difficult. e. Fiscal policy often affects only current income, but many economic decisions are made on the basis of permanent income.Rea Which of the following is true according to mainstream economics? O Ifa balanced budget amendment to the Constitution were ratified, we should expect the Federal Reserve and Monetary Policy to be less important OIf a balanced budget amendment to the Constitution were ratified, we should expect Fiscal Policy to become more effective three of the answers listed are correčt O Ifa balanced budget amendment to the Constitution were ratified, we should expect worse recessions If a balanced budget amendment to the Constitution were ratified, we should expect milder recessions 05:24 troduction A ENG 8°C O 23-12-2021 P Type here to search SUS prt sc f11 f12 pause break delete insert f9 f10 f8 ロ/京 f3 f4 f5 f6 f7 esc sysrq & backspace 2 3 4 5 6 7 { } Q E Y U P. 86 2T %23
- Which of the following statements is true of government spending? O An increase in government spending raises the equilibrium level of income by a multiple of the original spending increase. O Government spending is a part of monetary policy, not fiscal policy. O A decline in government spending brings about an expansion in the economy. O An increase in government spending increases the recessionary gap in the economy. An increase in government spending shifts the aggregate demand curve downward by a fraction of the rise in governiment spending.The figure to the right shows a pair of budget deficit functions. Assume that initially the budget deficit function is (G+ID-T) The economy, initially at Y₁, then experiences a recession. The government attempts to reduce the size of the recession with an expansionary fiscal policy, and the economy ends up at an output level of Y₂. The effect on the government budget deficit would be best shown as O O O A. the change from 0 to D1. B. the change from 0 to D2. C. the change from 0 to D3. OD. the change from D1 to D2. E. the change from D1 to D3. Click to select your answer and then click Check Answer. Deficit/Surplus (in billions of dollars) 500- 400- 300- 200- IDS D2 D1 100- 0- -100- -200- -300- The Budget Deficit Function 300 800 Y₂Y₁ 900 1200 (G+ID-T)₁ (G+iD-T) Real GDP (in billions of dollars) dou *In each of the following cases, either a recessionary or inflationary gap exists. Assume that the aggregate sup- ply curve is horizontal, so that the change in real GDP arising from a shift of the aggregate demand curve equals the size of the shift of the curve. Calculate both the change in government purchases of goods and ser- vices and the change in government transfers necessary to close the gap. 6, a. Real GDP equals $100 billion, potential output equals $160 billion, and the marginal propensity to consume is 0.75.
- Given an upward-sloping short-run AS curve, expansionary fiscal policy (ceteris paribus) will result in: (i) Higher prices in the short run (ii) Higher output in the short run (iii) Higher prices in the long run (iv) Higher output in the long run O a. Only (i) and (ii) O b. Only (iii) and (iv) O c. Only (ii) and (iii) O d. Only (i) and (iv)Who Controls Fiscal Policy? O The Federal Reserve Bank O The President and Congress O Congress Only O The President OnlyWhich statement is CORRECT? A) Automatic stabilizers indicate deliberate action by policy makers. O B) Discretionary fiscal policy shows automatic adjustments without any specific effort by policy makers. C) Discretionary fiscal policy indicates deliberate action by policy makers. Automatic stabilizers are risky tó use and sometimes can get the economy D) destabilized.
