Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 32, Problem 5MCQ
To determine
Whether needs-tested spending is an automatic or a discretionary fiscal policy.
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In a recession, needs-tested spending ________ and induced taxes ________.
increases; increase
decreases; increase
increases; decrease
decreases; decrease
increase; do not change
Discretionary fiscal policy is defined as fiscal policy
initiated by an act of Congress.
left to the discretion of military authorities.
with multiplier effects.
initiated by a Presidential proclamation.
triggered by the state of the economy.
If government expenditure on goods and services increase by $100 billion, then aggregate demand
increases by $100 billion.
decreases by more than $100 billion.
increases by more than $100 billion.
increases by less than $100 billion.
remains unchanged.
The magnitude of the tax multiplier is ________ the magnitude of the government expenditure multiplier.
smaller than
greater than
exactly one half
the inverse of
equal to
Suppose the economy is in an equilibrium in which real GDP is less than potential GDP. To increase…
10.
Legislative lags associated with fiscal policy are due to all of the following, except:
the political infighting involved in approving changes in government spending or taxes
the poor and conflicting data available to policymakers.
the delays in assessing the real state of the economy.
the forecasting deficiencies of econometric models.
What issue or problem in the economy would be fixed with expansionary fiscal policy? Contractionary fiscal policy?
Chapter 32 Solutions
Foundations of Economics (8th Edition)
Ch. 32 - Prob. 1SPPACh. 32 - Prob. 2SPPACh. 32 - Prob. 3SPPACh. 32 - Prob. 4SPPACh. 32 - Prob. 5SPPACh. 32 - Prob. 6SPPACh. 32 - Prob. 7SPPACh. 32 - Prob. 8SPPACh. 32 - Prob. 9SPPACh. 32 - Prob. 10SPPA
Ch. 32 - Prob. 1IAPACh. 32 - Prob. 2IAPACh. 32 - Prob. 3IAPACh. 32 - Prob. 4IAPACh. 32 - Prob. 5IAPACh. 32 - Prob. 6IAPACh. 32 - Prob. 7IAPACh. 32 - Prob. 8IAPACh. 32 - Prob. 9IAPACh. 32 - Prob. 10IAPACh. 32 - Prob. 11IAPACh. 32 - Prob. 1MCQCh. 32 - Prob. 2MCQCh. 32 - Prob. 3MCQCh. 32 - Prob. 4MCQCh. 32 - Prob. 5MCQCh. 32 - Prob. 6MCQCh. 32 - Prob. 7MCQCh. 32 - Prob. 8MCQ
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- Is expansionary fiscal policy more attractive to politicians who believe in larger government or to politicians who believe in smaller government? Explain your answer.arrow_forwardWhat would happen if contractionary fiscal policy were implemented during an economic boom but, due to Lag, it did not take effect until the economy slipped into recession?arrow_forwardSpecify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below and sketch a diagram using aggregate demand and aggregate supply curves to illustrate your answer: A recession. A stock market collapse that hurts consumer and business confidence. Extremely rapid growth of exports. Rising inflation. A rise in the natural rate of unemployment. A rise in oil prices.arrow_forward
- What is the main reason for employing contractionary fiscal policy in a time of strong economic growth?arrow_forwardWhat is the difference between expansionary fiscal policy and contractionary fiscal policy?arrow_forwardExpansionary fiscal policy occurs when the government decreases spending or increases taxes to stimulate the economy toward expansion. True or Falsearrow_forward
- Describe the role of the budget in fiscal policy.arrow_forwardClassify each statement based on the type of fiscal policy to which it refers. answer bank in image Expansionary fiscal policy Supply‑side fiscal policy Contractionary fiscal policyarrow_forwardQuestion 33 Expansionary fiscal policy occurs when the government increases __________, decreases __________, or both to stimulate the economy toward expansion. spending; the money supply taxes; spending the money supply; spending spending; taxes the money supply; taxes Question 34 If your marginal propensity to consume is 0.6 and you get an additional $600 in income, you would spend ______ on consumption. $200 $240 $360 $1,000 $1,500 Question 35 If a bank has a required reserve ratio of 25% and there are $5,300,000 in deposits, what is amount of required reserves? $25,000 $280,000 $1,325,000 $2,275,000 $5,005,000arrow_forward
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