Question

1.

Some critics of expansionary fiscal policy believe that:

A.

helping poor people in a recession produces an incentive to look for a job.

B.

accumulating more government debt is more harmful than the short-run effects of a recession.

C.

a recession should be dealt with by increasing the size of government.

D.

such a policy should be pursued only to support excessive economic growth.

2.

. A fiscal policy lag is the length of time it takes:

A.

the president to develop a simulative tax and spending program to present to Congress.

B.

the states to identify spending projects that are candidates for federal funding.

C.

the president and Congress to agree on a possibly controversial tax and spending program and to begin implementation.

D.

contractors to hire additional employees required to implement the new federal spending programs.

3.

Fewer people collecting unemployment benefits during an economic downturn is an example of an automatic stabilizer that works to ease the effects of the recession.

A.

True

B.

False

4.

. A deficit occurs when tax revenue exceeds spending in a given year.

A.

True

B.

False

Answer 1

1) :- B is right option, accumulating more government debt is more harmful than the short-run effects of a recession.

Expansionary fiscal policy are those policy which are used to increase Purchasing power of consumer by putting more money in their hand SO that aggregate demand also expand to stimulate economy.

2) :- c is right option the president and Congress to agree on a possibly controversial tax and spending program and to begin implementation.

•Fiscal policy is policy which is used by government to maintain economy stability by increasing or Decreasing government spending or taxes.

•Lag is defined as the gap between identification of problem and establishment of solution for that economy problem. It can be insider or outsider too.

3) :- it is false, Fewer people collecting unemployment benefits during an economic downturn is an example of an automatic stabilizer that works to ease the effects of the recession.

•Automatic stabilizer used by government to counters up and down of economy cycle. During recession people losses their job mostly. people are unemployed at that time And claim for unemployment insurance the growth in unemployment insurance payment lead to lessens the income loss .

4) :-it is false

•A deficit is occur when government spending is excess tax revenue in the year.

•It means it occur when spending is more than Revenue

•Government budget deficit lead higher interest rate and This lead trade deficit.

•Budget deficit is flow variable in nature.