Question 26 (1 point) During recessions, government expenditure automatically A)

Question

Question 26 (1 point) During recessions, government expenditure automatically A) falls because of programs such as unemployment insurance and Medicaid. B) rises because of the progressive income tax system. C) rises because of programs such as unemployment insurance and Medicaid. D) falls because of the progressive income tax system. Save Question 27 (1 point) The tax multiplier equals the change in divided by the change in A) taxes; consumption spending OB) equilibrium real GDP: taxes C) consumption spending; taxes O D) taxes; equilibrium real GDP Save Question 28 (1 point) For the federal deficit to be lowered, O A) the federal government's expenditures must be lower than its tax revenue. B) the Federal Reserve must raise interest rates and lower the required reserve ratio. C) the federal government must decrease its spending and increase net exports. @ D) the Federal Reserve must reduce the money supply Save Question 29 (1 point)

Explanation / Answer

26. C. During recession, unemployment increases and thus government expenditure increases.

27. B. Tax multiplier = dY/DT= -b/1-b where b is marginal propensity to consume.

28. A. Federal deficit = Federal exoenditure -revenue

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