Reading 26: Fiscal Policy - LOS d ～ Q1-3 about, black, policy, Robert, class

mayanfang1

Q1. Robert Necco and Nelson Packard are economists at Economic Research Associates. ERA asks Necco and Packard for their opinions about the effects of fiscal policy on real GDP for an economy currently experiencing a recession. Necco states that real GDP is likely to increase if both government spending and taxes are increased by the same amount. Packard states that if both government spending and taxes are increased by the same amount, there is no expected net effect on real GDP.

Are the statements made by Necco and Packard CORRECT?

                  Necco             Packard

 

A) Incorrect                                     Correct

B) Incorrect                                     Incorrect

C) Correct                                       Incorrect

Q2. Assuming the federal government maintains a balanced budget, the most likely effects of a tax increase on government expenditures and real GDP are:

      Government Expenditures   Real GDP

 

A) Decrease                                   Decrease

B) Increase                                     Increase

C) Increase                                     Decrease

Q3. Assuming the economy currently is experiencing high inflation, an example of appropriate discretionary fiscal policy is:

A)   reduce government expenditures on major government construction projects.

B)   reduce the money supply.

C)   increase the federal funds target rate.

kinan

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kinan

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danforth

d

jingh1981

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xwsh0325

d

seraphiris0116

thanks

viss

Q1. A

echopapa

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jiahow

thanks