fiscal policy

If Congress increases government spending by the same amount it increases taxes aggregate demand will

• remain the same
• decrease, these are both contractionary
• increase
• shift down

If the federal government is attempting to encourage spending by consumers and businesses, a fiscal policy BEST serving this purpose would be

• decreasing taxes.
• decreasing government spending.
• reducing the investment tax credit.
• balancing the budget.

The MPC is .75.  Congress increase government spending by $100 billion and increases taxes by $100 billion.  The GDP

• increases by $800 billion
• decreases by $800 billion
• remains the same
• increases by $100 billion

Which of the following are responsible for making fiscal policy decision? 

• The President and Congress
• The Federal Reserve System
• The National Council of Economic Advisors
• The commerce Department

Taxing & spending to slow the economy is referred to as 

• budget surplus 
• monetary policy
• contractionary policy
• budget deficit

An example of expansionary fiscal policy would be

• cutting taxes.
• cutting government spending.
• cutting production of consumer goods.
• cutting prices of consumer goods.

If and economy experiences a dramatic rise in prices, which fiscal policy action could be taken?

• Selling securities on the open market
• Raising interest rates
• Reducing government spending
• Raising reserve requirements

If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is 

• decreasing taxes.
• decreasing spending.
• decreasing the money supply.
• decreasing the reserve requirement.

a plan to reduce aggregate demand and slow the economy

• Contractionary Fiscal Policy
• Expansionary Fiscal Policy
• Contractionary Monetary Policy
• Expansionary Monetary Policy

a plan to increase aggregate demand and stimulate the economy

• Contractionary Fiscal Policy
• Expansionary Fiscal Policy
• Contractionary Monetary Policy
• Expansionary Monetary Policy