QUESTION 4 Letting automatic stabilizers fix the deficit rather than use fiscal policy might be preferred because people know fiscal policy might be temporary. fiscal policy might raise interest rates. there is little to no time lag. All of the above. QUESTION 5 The period in history when the United States had the highest national debt relative to the size of the economy is/was: today. during the 1980s. during the Depression. during WWII. QUESTION 6 The concept of crowding out refers to the idea that: increased government borrowing will make private borrowing more expensive increased borrowing from foreign countries will increase the current opportunity cost of borrowing The Federal Reserve will refuse to lend if the government borrows too much State and local governments cannot borrow when the federal government borrows too much
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QUESTION ONE [25] “Fiscal policy is the use of government spending and taxation to influence the economy. It seeks to support structural reforms of an economy consistent with long run growth, employment creation and an equitable distribution of income.” In terms of the above statement, using the two main tools of fiscal policy as the basis for your answer, examine how fiscal policy can be implemented if an economy is in the downswing of a business cycle.
Dominador T.
1. The main goal of monetary policy is Group of answer choices a. to equalize income disparity among citizens of the United States with Congress passing an increase in the federal minimum wage. b. to control the amount of public debt sold to foreign states with the Executive Office of the President determining interest rates on government backed securities. c. to control the interest rates on money lent to foreign states with the International Monetary Fund authorization. d. to expand the government's revenue base so as to reduce the deficit with the Internal Revenue Service collecting more taxes. e. to affect how much money is available to businesses and banks with the Federal Reserve Board using interest rates as the primary tool. 2. What is the main purpose of fiscal policy? Group of answer choices a. to affect how much money in federal grants is available to state governments for capital projects. b. to determine how much interest the government will pay on the federal debt. c. to affect how much money the U.S. Teasury department makes available to foreign governments for investment and its cost. d. to use taxes and government spending, at the state and national levels, to help stimulate or slow down economic growth. e. to stimulate the economy with the Secretary of Commerce increasing the number of exports into the United States.
Nick J.
Using policy to stabilize the economy. The government has the ability to influence the level of output in the short run using monetary and fiscal policy. There is some disagreement as to whether the government should attempt to stabilize the economy. Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. 1) Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president. 2) Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. 3) The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates. 4) Businesses make investment plans many months in advance. Which of the following are examples of automatic stabilizers? Check all that apply. 1) The discount rate 2) Unemployment insurance benefits 3) The federal funds rate
Jennifer S.
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