Question

11. Government spending and taxation changes that cause fiscal policy to be expansionary when the economy contracts and contractionary when the economy expands are known as: A) discretionary fiscal policy. B) automatic stabilizers. autonomous spending policies. destabilizing fiscal policies. 12. 4) The government budget balance equals: taxes plus government purchases plus government transfers. taxes minus government purchases minus government transfers. taxes minus government purchases plus government transfers. taxes plus government purchases minus government transfers. D) 13. The cyclically adjusted budget balance is: A) an estimate of the contractionary fiscal policy needed to close an inflationary вар. B) an estimate of the tax increase needed to compensate for larger government transfers so that the budget remains balanced. C) an estimate of the expansionary fiscal policy needed to close a recessionary gap. D) an estimate of what the budget balance would be if real GDP were exactly equal to potential output. 14. If a government's debt is increasing but its GDP is increasing faster, one will find the government's: A) total debt falling. debt-GDP ratio falling. deficit falling ability to pay falling. B) 15. If the AD curve were to shift to the right, then in the short run there would A) B) an increase in aggregate output and an increase in the price level. an increase in aggregate output and a decrease in the price level. a decrease in aggregate output and a decrease in the price level. a decrease in aggregate output and an increase in the price level. D) 16. The Bank of Canada plays a key role in fighting slumps and promoting recovery because it: A) determines tax rates. determines government spending. conducts monetary policy. is responsive to the people who elected its members to office. DI

Please just help spent the semester in the hospital and apparently have to do an assignment..

Answer 1

11. A
(Such changes made by government are a part of discretionary fiscal policy.)

12. B
(Budget balance = T- G - TR. As, spending of government is excluded from the revenue.)

13. D
(It is the value of budget balance when real GDP = potential output.)

14. B
(When increase in debt < increase in GDP, so, debt to GDP ratio will decrease.)

15. A
(Increase in AD increases both output and price level.)

(Note: As HOMEWORKLIB's policy, 4 MCQs are to be answered at a time.)