ECO 110- Quiz 3

a

A political problem with discretionary fiscal policy is the political business cycle. Federal Reserve. split control of the legislative and judicial branches of government. business cycle.

d

An economist worrying about the economic impact of environmental regulations would model that impact with an increase in aggregate supply. a decrease in aggregate demand. an increase in aggregate demand. a decrease in aggregate supply.

b

An example of discretionary fiscal policy would be the operation of the welfare state. a tax cut adopted to stimulate consumption. the operation of the progressive federal income tax. an interest rate cut implemented to stimulate consumption.

d

Discretionary Fiscal Policy differs from Nondiscretionary Fiscal Policy in that the former deals with interest rates, and the latter deals with tax policy. the former is built into the system, whereas the latter requires timely decisions. the former deals with tax policy, and the latter deals with interest rates. the former requires timely decisions, whereas the latter is built into the system.

c

In reaction to the recession of 2001, a tax cut was passed in which tax rebate checks were sent to millions of American families. This was intended to decrease aggregate demand. increase aggregate supply. increase aggregate demand. decrease aggregate supply.

d

Nondiscretionary Fiscal Policy works by having progressive income tax rates take a portion of increased income thereby dampening periods of growth. welfare programs reduce spending on people when they have increased incomes, thereby dampening periods of economic growth. Congress and the President agree upon a tax cut to stimulate growth. both progressive income tax rates take a portion of increased income and welfare programs reduce spending on people when they have increased incomes thereby dampening periods of economic growth.

c

Which of the following will increase macroeconomic equilibrium prices? an increase in input prices an increase in taxes a decrease in government spending an increase in productivity

b

Which of the following will increase macroeconomic equilibrium real gross domestic product? a decrease in productivity a decrease in input prices a decrease in government spending an increase in taxes

a

Which of the following will increase macroeconomic equilibrium real gross domestic product? an increase in government spending an increase in taxes a decrease in productivity an increase in input prices

d

Which of the following would be described as the operational lag? The time required to know that there is a recession. Both the time required to know that there is a recession and agree upon a policy remedy for a recession. The time required to agree upon a policy remedy for a recession. The time required to get a particular plan implemented with the money getting into peoples' hands.