Chapter 1

Question 1

Is the means by which a government adjusts its levels of spending in order monitor and influence a nations economy

Answer 1

Fiscal Policy

Question 2

It is the sister strategy to monetary policy with which a central bank influences a nations money supply

Answer 2

Fiscal policy

Question 3

Is based on the theories of british economist john maynard keynes

Answer 3

Fiscal policy

Question 4

A government can use this to increase taxes in order to suck money out of the economy

Answer 4

Fiscal policy

Question 5

Cpuld also dictate a decrease in government spending and thereby decrease the money in circulation

Answer 5

Fiscal policy

Question 6

These two policies are used in various combinations in an effort to direct a countrys exonomic goals

Answer 6

Fiscal and monetary policy

Question 7

Before the great depression in the US, the governments approach to the ecpnomy was

Answer 7

Laissez faire

Question 8

This theory basically states that governmenta can influence macroeconomic productivity levels by increasing or decreasing tax levels and public spending

Answer 8

Keynesian economics

Question 9

An increase in the supply of money followed by an increase in consumer demand xan result in a

Answer 9

Decrease in the value of money

Question 10

Pumping money into the economy

Answer 10

Pump priming

Question 11

The increase in ecpnomic productivity can cross over a very fine line and lead to too much money in the market. This excess in supply decreases the value of money, whilw pushing up price, hence

Answer 11

Inflation occurs

Question 12

Is typically implemented by a central bank

Answer 12

Monetary policy

Question 13

Decisions are set by the national government

Answer 13

Fiscal policy

Question 14

Is expected to improve the economys rate of growth of output in the quarters ahed

Answer 14

Stimulative monetary policy

Question 15

The growth of output is measured by

Answer 15

GDP

Question 16

Is designed to slow the economy in the future to offset inflationary pressures

Answer 16

Tight or restrictive monetary policy

Question 17

Are normally expected to stimulate economic growth in the short run

Answer 17

Stimulative fiscal policies
Tax cuts
Spending increases

Question 18

Tend to slow the rate of future economic expansion

Answer 18

Tax increases
Spending cuts

Question 19

Is changes in the taxing and spending of the federal governmwnt for purposes of expanding or contracting the level of aggregate demand

Answer 19

Fiscal policy

Question 20

Involves lowering taxes and i creasing government spending

Answer 20

Expansionary fiscal policy

Question 21

Requires higher taxes and reduced spending

Answer 21

Contractionary fiscal policy

Question 22

According to him, a recession requires deficit spending,while an overheated expansion requires a budget surplus

Answer 22

Keynes

Question 23

It requires deficit spending

Answer 23

Recession

Question 24

Requires a budget surplua

Answer 24

Overheated expansion

Question 25

A recession requires

Answer 25

Deficit spending

Question 26

An overheated expansion requires

Answer 26

Budget surplus

Question 27

Types of fiscal policy

Answer 27

Discretionary fiscal policy Automatic stabilizers or nondiscretionary fiscal policy

Question 28

The first way this can be done is through the federal budget process

Answer 28

Discretionary fiscal policy

Question 29

A second type of fiscal policy is built into the structure of federal taxes and spending

Answer 29

Automatic stabilizers