If a government wants to pursue an expansionary
by | Mar 18, 2020 | Uncategorized
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If a government wants to pursue an expansionary fiscal policy, then a tax cut of a certain size will be more expansionary when the:
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A.
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Economy’s MPS is small
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B.
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Economy’s MPS is large
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C.
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Economy’s MPC is small
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D.
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Unemployment rate is low
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32.
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Which of the following fiscal policy changes would be the most expansionary?
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A.
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A $40 billion increase in government spending
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B.
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A $20 billion tax cut and $20 billion increase in government spending
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C.
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A $10 billion tax cut and $30 billion increase in government spending
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33.
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Which of the following expansionary fiscal policy changes would be most favored by those economists who think that the government is too large and inefficient?
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A.
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A $40 billion increase in government spending
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B.
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A $20 billion tax cut and $20 billion increase in government spending
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C.
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A $10 billion tax cut and $30 billion increase in government spending
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34.
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An economy is experiencing a high rate of inflation. The government wants to reduce consumption by $36 billion to reduce inflationary pressure. The MPC is 0.75. By how much should the government raise taxes to achieve its objective?
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35.
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Discretionary fiscal policy will stabilize the economy most when:
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A.
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deficits are incurred during recessions and surpluses during inflations.
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B.
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the budget is balanced each year.
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C.
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deficits are incurred during inflations and surpluses during recessions.
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D.
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budget surpluses are continuously incurred.
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