AD, AS, and Fiscal Policy

Who is in charge of fiscal policy?

• Government
• Federal Reserve

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 help the economy grow is referred to as

• expansionary policy
• monetary policy
• contractionary policy
• budget deficit

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 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.

Which of the following is not a tool of fiscal policy?

• Taxing
• Spending
• Interest Rates
• All of these options are tools of fiscal policy.

When taxes decrease, consumption

• increases, so aggregate demand shifts right

• increases, so aggregate supply shifts right

• decreases, so aggregate demand shifts left

• decreases, as aggregate supply shifts left

Consumption would decrease and aggregate demand would shift

• right if taxes increase

• right if taxes decreases

• left in taxes increased

• left if taxes decreased

Which of the following shifts aggregate demand to the right?

• An increase in the money supply

• An increase in net exports at every exchange rate

• An investment tax credit

• All of the above are correct