Fiscal policy is NOT often used as a stabilisation tool. However, it does have important roles in the economy. Three of these roles are:Group of answer choicesmanaging collection of taxes, public health and antiterrorism policymanaging public assets, defence projects, and public safetymanaging government monetary policy, inflation and interest ratesmanaging income distribution, demographic change, and public debtmanaging full employmen, price stability and exchange rates.

Fiscal policy helps the government manage the economy by:A.setting the level of unemployment for the year.B.spending tax money during difficult economic times.C.setting environmental regulations for businesses.D.deciding on the proper money supply in the country.

Fiscal policy is a mechanism the government employs to influence the economy. Fiscal policy is based onMultiple Choicethe government's taxing and spending decisions.the money supply.the importance of maintaining a 12-month (fiscal year) economic cycle.the projections of the Federal Reserve Board.the idea that a balanced budget is the key to a healthy economy.

FISCAL POLICY

Fiscal policy is NOT often used as a stabilisation tool. However, it does have important roles in the economy. Three of these roles are:  managing full employmen, price stability and exchange rates.   managing collection of taxes, public health and antiterrorism policy   managing government monetary policy, inflation and interest rates   managing income distribution, demographic change, and public debt   managing public assets, defence projects, and public safety Review Week 5 lecture on fiscal policy.  Question 21 / 1 ptsThe short-run effect on equilibrium GDP of an equal change in government expenditure and net taxes is a definition of:  balanced GDP   balanced savings   the balanced budget   the balanced budget multiplier   balanced growth This concept is useful when G and T change by an equal amount. Question 31 / 1 ptsGovernment budget deficits tend to  increase when there is an expansionary output gap.  remain in balance irrespective of business cycles  increase in recessions  None of the others is correct.  decrease in recessionsReview fiscal policy and measuring budget deficits in Lecture 5. Question 41 / 1 ptsIf the marginal propensity to consume equals 0.75, then a $100 increase in after-tax disposable income leads to a _____ increase in consumption.  $0.25   $25   $100   $75   $0.75 Review the Keynesian consumption function in Lecture 4. Question 51 / 1 ptsIn the basic Keynesian model, all statements below except for one are true. Which is the incorrect statement?   Planned net exports always equal actual net exports.   Planned government spending always equals actual government spending.   Planned consumption always equals actual consumption.   Planned aggregate expenditure is always equal to output in equilibrium.   Planned investment always equals actual investment. Review the Keynesian model in Lecture 4. Question 61 / 1 ptsWhich of the following acts as an automatic stabiliser?  None of the other answer options is correct.   Unemployment benefit payments to the unemployed   Interest rate changes   Increases in government spending on infrastructure   Reductions in nominal wages as the inflation rates rise Review the fiscal policy for stabilisation in Lecture 5. Question 71 / 1 ptsIf we assume that the planned aggregate expenditure is given by the equation PAE = 960 + 0.8Y so that exogenous expenditure equalled 960, with the multiplier of 5, the 10-unit drop in exogenous expenditure would result in a _____________ in short-run equilibrium output.  None of the answers is correct   50-unit decline   40-unit decline   950-unit decline   4-unit decline Review the multiplier effect in the Keynesian model in Lecture 4. Question 81 / 1 ptsSustained government deficits can be harmful because they reduce national ____, which in turn reduce _____ in new capital goods, an important source of long-run ________:  output gap; disposable income; exports   savings; investments; economic growth   inflation; poverty gap; output shortage   equality gap, employment; welfare   none of the others Think about the relation between government deficits and the economy. Question 91 / 1 ptsA$100 million increase in government purchases will have a bigger impact on equilibrium output  The smaller are the marginal tax rate and marginal propensity to import and the larger is the marginal propensity to consume.   The smaller are the marginal tax rate and marginal propensity to consume and the larger is the marginal propensity to import.   The larger are the marginal tax rate and marginal propensity to import and the smaller is the marginal propensity to consume.   The smaller are the marginal tax rate and marginal propensity to import and the smaller is the marginal propensity to consume.   The larger are the marginal tax rate and marginal propensity to import and the larger is the marginal propensity to consume. Review the four-sector economy multiplier. Question 101 / 1 ptsIf planned aggregate expenditure (PAE) in an economy equals 2000 + 0.8Y and potential output (Y*) equals 9000, then this economy has:  no induced expenditure.   No output gap.   an expansionary gap.   a recessionary gap.   no autonomous expenditure.

How does the government typically change fiscal policy to try to keep the economy stable during a period of rapid economic growth?A.Lowering taxes on businesses and individualsB.Increasing the amount of money in circulationC.Decreasing the amount of money in circulationD.Increasing taxes on businesses and individualsSUBMITarrow_backPREVIOUS