CH12 - CHAPTER 12 Fiscal Policy Topic 1. 2. 3. 4. 5. 6. 7....

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CHAPTER 12 Fiscal Policy Topic Question numbers ___________________________________________________________________________________________________ 1. Fiscal policy; definitions 1-8 2. Discretionary fiscal policy 9-45 3. Financing deficits; disposing of surpluses 46-51 4. Built-in stabilizers 52-78 5. Full-employment budget 79-113 6. Problems, criticisms, complications 114-127 7. Fiscal policy; AD-AS and AE model (these questions assume coverage of AE model) 128-138 8. Fiscal policy; open economy complications 139-145 9. Supply-side aspects 146-150 Last Word 151-153 True-False 154-166 ___________________________________________________________________________________________________ Multiple Choice Questions Fiscal policy; definitions 1. In the Employment Act of 1946, the Federal government: A) applied the unemployment compensation program to intrastate workers. B) agreed to subsidize unemployed workers to the extent of 50 percent of their average incomes. C) committed itself to accept some degree of responsibility for the general levels of employment and prices. D) agreed to hire, through public works programs, any employees who cannot find jobs with private industry. 2. Fiscal policy is carried out primarily by: A) the Federal government. B) state and local governments working together. C) state governments alone. D) local governments alone. 3. Discretionary fiscal policy refers to: A) any change in government spending or taxes that destabilizes the economy. B) the authority that the President has to change personal income tax rates. C) changes in taxes and government expenditures made by Congress to stabilize the economy. D) the changes in taxes and transfers that occur as GDP changes. Page 1
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4. Countercyclical discretionary fiscal policy calls for: A) surpluses during recessions and deficits during periods of demand-pull inflation. B) deficits during recessions and surpluses during periods of demand-pull inflation. C) surpluses during both recessions and periods of demand-pull inflation. D) deficits during both recessions and periods of demand-pull inflation. 5. Fiscal policy refers to the: A) manipulation of government spending and taxes to stabilize domestic output, employment, and the price level. B) manipulation of government spending and taxes to achieve greater equality in the distribution of income. C) altering of the interest rate to change aggregate demand. D) fact that equal increases in government spending and taxation will be contractionary. 6. Discretionary fiscal policy is so named because it: A) is undertaken at the option of the nation's central bank. B) occurs automatically as the nation's level of GDP changes. C) involves specific changes in T and G undertaken expressly for stabilization at the option of Congress. D)
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CH12 - CHAPTER 12 Fiscal Policy Topic 1. 2. 3. 4. 5. 6. 7....

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