ECO 201 CH. 30

The group of three economists who provide fiscal policy recommendations to the president is the Council of Economic Advisers. Joint Economic Committee. Bureau of Economic Analysis. Federal Reserve Board of Governors.

Council of Economic Advisers.

Which of the following represents the most expansionary fiscal policy? a $10 billion tax cut a $10 billion increase in government spending a $10 billion tax increase a $10 billion decrease in government spending

a $10 billion increase in government spending

Assume the economy is at full employment and that investment spending declines dramatically. If the goal is to restore full employment, government fiscal policy should be directed toward an equality of tax receipts and government expenditures. an excess of tax receipts over government expenditures. an excess of government expenditures over tax receipts. a reduction of subsidies and transfer payments and an increase in tax rates.

an excess of government expenditures over tax receipts.

Discretionary fiscal policy will stabilize the economy most when deficits are incurred during recessions and surpluses during inflations. the budget is balanced each year. deficits are incurred during inflations and surpluses during recessions. budget surpluses are continuously incurred.

deficits are incurred during recessions and surpluses during inflations.

Discretionary fiscal policy refers to any change in government spending or taxes that destabilizes the economy. the authority that the president has to change personal income tax rates. intentional changes in taxes and government expenditures made by Congress to stabilize the economy. the changes in taxes and transfers that occur as GDP changes.

intentional changes in taxes and government expenditures made by Congress to stabilize the economy.

Contractionary fiscal policy is so named because it involves a contraction of the nation's money supply. necessarily reduces the size of government. is aimed at reducing aggregate demand and thus achieving price stability. is expressly designed to expand real GDP.

is aimed at reducing aggregate demand and thus achieving price stability.

Expansionary fiscal policy is so named because it involves an expansion of the nation's money supply. necessarily expands the size of government. is aimed at achieving greater price stability. is designed to expand real GDP.

is designed to expand real GDP.

A tax reduction of a specific amount will be more expansionary the smaller is the economy's MPC. larger is the economy's MPC. smaller is the economy's multiplier. less is the economy's built-in stability.

larger is the economy's MPC.

The cyclically adjusted budget tells us that in a full-employment economy, the federal budget should be in balance. that tax revenues should vary inversely with GDP. what the size of the federal budget deficit or surplus would be if the economy was at full employment. the actual budget deficit or surplus realized in any given year.

what the size of the federal budget deficit or surplus would be if the economy was at full employment.