If the government reduces expenditure on goods and services by $30 billion, then aggregate demandĪ) increases by more than $30 billion and real GDP increases.ī) increases by $30 billion and real GDP increases.Ĭ) increases and potential GDP increases.ĭ) decreases by more than $30 billion and real GDP decreases.Į) decreases by $30 billion and real GDP decreases. government has generally had a government budget _ and so the national debt has _.Į) deficit decreased deficit increased Automatic stabilizers are defined asĪ) policy that stabilizes without the need for action by the governmentī) actions taken by the President without Congressional consent to stabilize the economyĬ) actions taken by an act of Congress to stabilize the economyĮ) discretionary policy taken to stabilize the economy policy that stabilizes without the need for action by the government An example of automatic fiscal policy isĪ) a change in taxes that has no multiplier effectī) Congress passing a tax rate reduction packageĬ) expenditure for unemployment benefits increasing as economic growth slowsĭ) the Federal Reserve reducing interest rates as economic growth slowsĮ) the federal government expanding spending at the Department of Education expenditure for unemployment benefits increasing as economic growth slows Induced taxes are defined as taxesĪ) enacted by Congress that explicitly state the amount to be paidĬ) that rise in recessions and fall in expansionsĭ) that are avoided with the use of legal tax sheltersĮ) we are forced to pay for services from the government that vary with real GDP Needs-tested spending is defined asĪ) spending by Congress on its own perks of officeī) taxes paid by those qualified by their incomeĬ) spending on programs for people qualified to receive benefitsĭ) spending by the President on the White HouseĮ) spending that increases in expansions and decreases in recessions spending on programs for people qualified to receive benefits In a recession, needs-tested spending _ and induced taxes _.Į) increases increase increases decrease If government expenditure on goods and services increase by $100 billion, then aggregate demandĮ) increases by more than $100 billion increases by more than $100 billion Discretionary fiscal policy is a fiscal policy action, such asĪ) an increase in payments to the unemployed, initiated by the state of the economy.ī) a tax cut, initiated by an act of Congress.Ĭ) a decrease in tax receipts, initiated by the state of the economy.ĭ) an interest rate cut, initiated by an act of Congress.Į) an increase in the quantity of money b) a tax cut, initiated by an act of Congress. Automatic stabilizers are called this because they act to stabilize economic cycles and are automatically triggered without additional government action.Since 2000, the U.S. The best-known automatic stabilizers are progressively graduated corporate and personal income taxes, and transfer systems such as unemployment insurance and welfare.
Which of the following is the best example of automatic stabilizer? Welfare reform requires deliberate legislative action therefore, it is not an automatic stabilizer. Which of the following is not an example of an automatic stabilizer? welfare reform makes it more difficult to receive welfare even when the economy enters a recession. Which is not an example of an automatic stabilizer? In particular, automatic stabilizers provide income replacement immediately when unemployment starts to rise. What are the automatic stabilizers in the fiscal policy?Īutomatic stabilizers are usually defined as those elements of fiscal policy which reduce tax burdens and increase public spending without discretionary government action.
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