A fiscal expansion coupled with a monetary expansion must always cause a) Output to rise b) Output to fall c) Interest rates to rise d) Interest rates to fall
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A fiscal expansion coupled with a monetary expansion must always cause
a) Output to rise
b) Output to fall
c) Interest rates to rise
d) Interest rates to fall
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- When there is a problem of a delay in terms of implementation of the fiscal policy, that would be categorized as _____. execution lag information lag decision lag Fiscal policy nowadays are focused on eliminating GDP gap True False When the Central Bank controls the money supply by controlling the amount of high-powered money in the economy, that is called _____. interest rate fixation selective credit control open market operations required reserves ratio policy The focus of monetary policy nowadays is by using interest rate as an indicator. True False34. Discretionary fiscal policy refers to A) deliberate government efforts to stabilize the economy through government spending and taxes. B) the use of automatic stabilizers and intervention policies to stabilize the economy. C) any government policy that requires a lag period of at least three months. D) the deliberate use of government spending and taxes to complement the effects of monetary policy in an effort to stabilize the economy. 35. An inflationary gap can be closed with A) using an expansionary monetary policy. B) using a policy action such as a reduction in taxes. C) using a policy action such as a reduction in government purchases. D) imposing price controls to prevent prices from rising. 36. The term “crowding out” refers to the phenomenon that occurs when increased government spending A) raises the price level and reduces consumption. B)…Income tax collections: Group of answer choices rise during a recession, thus reduce the severity of the recession. rise during a recession, thus increase the severity of the recession. fall during inflationary episodes, thus increase the severity of the inflation. fall during a recession, thus reducing the severity of the recession.
- If the Fed overcorrects the economy during a period of decreased consumer spending...... ) underemployment can continue to be an issue unemployment can continue to be an issue () fiscal policies will be meaningless inflation can occur during the recovery ) foreign firms will purchase fewer US goods since the US dollar has appreciatedExplain the interaction of monetary policy and fiscal policy at full employmentLong run monetary neutrality implies that fiscal policy can only change output, not prices, in the long run monetary policy can change only nominal, not real, variables in the long run monetary policy can only change output, not prices, in the long run fiscal policy can change only real, not nominal, variables in the long run
- In the classical view, raising money supply will only cause inflation because Group of answer choices people will foresee inflation in the future with rational expectation. fiscal policy does not work in the short run. the velocity of money circulation is unpredictable. the real GDP output and the velocity of money circulation are fixed.Describe the fiscal stimulus packages and monetary policy interventions initiated by policymakers in countries to contain the devastating effects of the coronavirus pandemic.Which of the following statements do economists NOT agree on? a. Increases in the money supply shift aggregate demand to the right. b. In the long run, increases in the money supply increase prices, but not output. c. Recessions are associated with decreases in consumption, investment, and employment. d. Government should use fiscal policy to try and stabilize the economy.
- The Recognition Lag a)Is significant for both fiscal and monetary policy b) Is significant for fisca policy, but not so for monetary policy c)Is significant for monetary policy but not for fiscal policy d)Is insignificant for both fiscal and monetary policyFederal expenditures and tax revenues that automatically change throughout the business cycle in such a way as to help stabilise an economic expansion or contraction are known as: Select one: a. good federal governance. b. self-perpetuating monetary policy. c. automatic stabilisers. d. self-perpetuating fiscal policy.The ____________ lag for monetary policy is generally ____________ than it is for fiscal policy. A) recognition; longer B) recognition; shorter C) implementation; longer D) transmission; longer E) transmission; shorter