Question 1

The difference between automatic stabilizers and discretionary fiscal policy is mainly:

Accepted Answer

A)   that discretionary policies are less likely to be influenced by political consideration.
B)   that automatic stabilizers are more carefully thought-out answers to problems.
C)   that automatic stabilizers come into effect more quickly.
D)   that discretionary policy works faster in an emergency situation.E) A) and D)
F) B) and D)

Question 2

A major shortcoming of traditional monetary and fiscal policies is:

Accepted Answer

A)   their inability to deal simultaneously with unemployment and inflation.
B)   their inability to forecast the location of the potential GDP.
C)   the unpredictable reaction of foreigners to domestic policies.
D)   the unpredictability of the impact of automatic stabilizers.E) None of the above
F) B) and C)

Question 3

Which of the following is not a lag associated with discretionary fiscal policy?

Accepted Answer

A)   recognition
B)   decision
C)   political
D)   implementationE) None of the above
F) A) and C)

Question 4

Supply-side economics proposes:

Accepted Answer

A)   to increase the supply of tax dollars available to government.
B)   to increase spending on essential government services.
C)   to raise taxes in order to increase government revenues.
D)   to increase the available supply of goods and services in the economy.E) All of the above
F) A) and D)

Question 5

Price stability is desirable for all the following reasons except that:

Accepted Answer

A)   income and wealth are moved from those on fixed incomes to those on indexed salaries.
B)   real interest rates are not increased to protect lenders against unanticipated inflation.
C)   it reduces the difficulty with making decisions about resource allocation.
D)   businesses engage in productive activities that emphasize long-term returns.E) A) and C)
F) A) and B)

Exam 8: Stabilization Policy

Supply-side economics proposes:

Correct Answer
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Price stability is desirable for all the following reasons except that:

Correct Answer
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Which of the following is not a lag associated with discretionary fiscal policy?

Correct Answer
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A major shortcoming of traditional monetary and fiscal policies is:

Correct Answer
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The difference between automatic stabilizers and discretionary fiscal policy is mainly:

Correct Answer
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Exam 8: Stabilization Policy

Supply-side economics proposes:

Correct AnswerverifiedShow Answer

Price stability is desirable for all the following reasons except that:

Correct AnswerverifiedShow Answer

Which of the following is not a lag associated with discretionary fiscal policy?

Correct AnswerverifiedShow Answer

A major shortcoming of traditional monetary and fiscal policies is:

Correct AnswerverifiedShow Answer

The difference between automatic stabilizers and discretionary fiscal policy is mainly:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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