1- Fiscal policy under the 2009 American Recovery and Reinvestment Act took the
ID: 2429351 • Letter: 1
Question
1-
Fiscal policy under the 2009 American Recovery and Reinvestment Act took the form of:
Select one:
a. government spending alone.
b. tax cuts alone.
c. a mix of government spending and tax cuts.
d. neither government spending nor tax cuts.
2-
Fiscal policy:
Select one:
a. is the decrease in private spending that occurs when government increases spending.
b. occurs when people see that lower taxes today means higher taxes in the future, so instead of spending their tax cut they save it to pay future taxes.
c. is federal government policy on taxes, spending, and borrowing that is designed to influence business fluctuations.
d. is central bank policy on the monetary base, interest rates, and bank reserves that is designed to influence business fluctuations
3-
Which is the MOST effective fiscal policy to fight a recession if people react to uncertainty by saving all additional money that they earn or receive?
Select one:
a. a tax cut
b. a tax rebate
c. an increase in government spending
d. a do-nothing strategy that relies on automatic stabilizers
4-
President Obama's fiscal policy response to the 2008 recession involved changes in:
Select one:
a. government spending only.
b. taxation only.
c. both taxation and government spending.
d. neither government spending nor taxation.
5-
When an economy experiences a negative real shock, fiscal policy:
Select one:
a. using tax cuts is appropriate.
b. using increased government expenditures is appropriate.
c. is generally not appropriate.
d. is never used by politicians.
6-
Fiscal policy under the 2009 American Recovery and Reinvestment Act took the form of:
Select one:
a. government spending alone.
b. tax cuts alone.
c. a mix of government spending and tax cuts.
d. neither government spending nor tax cuts.
7-
Other things equal, will a temporary individual tax rebate or a permanent individual tax rebate provide the largest increase in aggregate demand?
Select one:
a. a temporary tax rebate
b. a permanent tax rebate
c. They will both produce the same amount of stimulus.
d. Neither will provide any stimulus.
Explanation / Answer
1. c. a mix of government spending and tax cuts.
Fiscal policy is the policy related to government spending and taxation.
2. c. is federal government policy on taxes, spending, and borrowing that is designed to influence business fluctuations.
Fiscal policy is the government policy which is related to taxation, government spending, borrowing, to influence market.
3. c. an increase in government spending
When people save additional money then to combat recession, government have to increase its spending.
4. c. both taxation and government spending.
Decrease in taxation and increase in government spending combat recession in the economy. US government uses both to reduce recession.
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