Which of the following statements regarding fiscal policy is correct? Select one: a. Expansionary fiscal policy (e.g. increasing the government deficit or reducing the surplus) always has a stabilising effect on the economy b. Just as a family worried about mounting debts should cut spending and save more, an economy should adopt austerity measures when its debt level is high to restore its public finances to balance c. In a recession, the aim of a government fiscal expansion is to over-ride the effects of automatic stabilisers d. In a downturn, unemployment benefits automatically increase government spending, and lower income levels reduce the amount of income tax that is paid. In a boom, unemployment benefits are reduced, decreasing government spending whilst more income tax revenue is collected. These are therefore automatic stabilisers.
Which of the following statements regarding fiscal policy is correct?
Select one: a. Expansionary fiscal policy (e.g. increasing the government deficit or reducing the surplus) always has a stabilising effect on the economy
b. Just as a family worried about mounting debts should cut spending and save more, an economy should adopt austerity measures when its debt level is high to restore its public finances to balance
c. In a recession, the aim of a government fiscal expansion is to over-ride the effects of automatic stabilisers
d. In a downturn,
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