Which of the following is considered contractionary

62) Which of the following is considered contractionary fiscal policy?
A) The New Jersey legislature cuts highway spending to balance its budget.
B) Congress increases defense spending.
C) Congress increases the income tax rate.
D) Legislation removes a college tuition deduction from federal income taxes.
Answer: C
62)
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Learning Outcome: Macro
-
9: Discuss fundamental approaches to fiscal policy.
63) Expansionary fiscal policy to prevent real GDP from falling below potential real GDP would
cause the inflation rate to be ________ and real GDP to be ________.
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Learning Outcome: Macro - 13: Discuss the key measures, theories, and effects of inflation and deflation.
64) Expansionary fiscal policy will 64)
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Learning Outcome: Macro - 9: Discuss fundamental approaches to fiscal policy.
65) Which of the following is an appropriate discretionary fiscal policy if equilibrium real GDP falls
below potential real GDP?
65)
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Learning Outcome: Macro - 9: Discuss fundamental approaches to fiscal policy.
13

66) To combat a recession with discretionary fiscal policy, Congress and the president should
A) decrease taxes to increase consumer disposable income.
B) raise taxes on interest and dividends, but not on personal income.
C) lower interest rates and increase investment by increasing the money supply.
D) decrease government spending to balance the budget.
Answer: A
66)
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946/563
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564
Learning Outcome: Macro - 9: Discuss fundamental approaches to fiscal policy.