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Which of the following is an example of a discretionary fiscal policy?

a. an increase in unemployment insurance payments during a recession

b. an increase in income tax receipts with rising income during an expansion

c. the tax cuts passed by Congress in 2001 to combat the recession

d. a decrease in food stamps issued during an expansion or boom

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Sonia Dhawan
Sonia DhawanLv10
20 Nov 2020

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Related questions

Which of the following are examples of automatic stabilizers? Check all that apply.

1. In response to the 2008 recession, Congress approved billions of dollars of additional spending on public infrastructure projects.

2. A corporate profits rise during an economic expansion, corporate income tax revenues rise.

3. As people earn higher incomes during an expansion, the progressive tax system requires them to pay higher average tax rates.

4. In 1968, Congress enacted a temporary 10% increase in personal income tax rates in response to an inflationary GDP gap.

Thank you!

6. To study the macroeconomy we must combined prices and quantities generated in single-product markets into broad aggregates.

a) True
b) False

7. An economist who favored expanded government would recommend:

a) tax cuts during recession and tax increases during inflation
b) tax increases during recession and tax cuts during inflation.
c) tax cuts during both recession and inflation
d) increases in government spending during a recession and tax increases during inflation.
e) tax cuts during recessions and reduction in government spending during inflation.

8. If Government tax revenue exceeds Government spending the result of the budget is

a) an increase in investment
b) a shortage
c) an increase in the deficit
d) a decrease in savings
e) a surplus

9. Which of the following statements is true?

a) In the US economy, the net export sector is positive.
b) Aggregate demand is the sum of total output produced by all firms in the US.
c) The aggregate supply curve is vertical if the price level is equal to the per-unit cost of production
d) Aggregate production sums up the four major components C+I+G+Xn in the US economy.
e) Government spending is the largest component of aggregate demand.

10. Which of the following statements is true?

  a) When unemployment is rising then real GDP is rising.
b) The required reserve ratio is a tool used by the government to control the demand for money.
c) The four components of aggregate supply are the same as aggregate demand.
d) when an imported resource such as oil has decreased that is an increase in aggregate demand.
e) The four components of aggregate demand---Households, Business, Government, and Net Exports.

TRUE or FALSE?

1. Real GDP can never be greater than potential GDP. 

2. When foreign countries experience an increase in income, this is likely to increase our GDP. 

3. The United States economy spends about as many months in recession as it spends in expansion. 

4. If individuals decrease their consumption spending then this is likely to reduce the growth rate of GDP, all else the same. 

5. Movements of real GDP around potential GDP are called the business cycle. 

6. If total government spending in a given year was $3.7 trillion, then all of this spending counted directly in GDP as part of the government spending (G) category. 

7. The last recession in the United States began in December of 2007. 

8. During a recession, the inflation rate tends to decline. 

9. Changes in spending that cause firms to change their level of production of goods/services are called supply shocks. 

10. All else the same, an increase in income in the United States leads to a decrease in our net exports. 

11. Since 1929 there have been 14 declared recessions in the United States. 

12. Total spending in the economy is equal to consumption + investment + government spending - net exports. 

13. During each recession, potential GDP falls. 

14. Percentage wise, the government collects more tax from individuals than it does from firms. 

15. During a recession, the Federal Reserve pursues contractionary monetary policy. 

16. During a recession, the Federal Reserve is most likely to sell government bonds to the public. 

17. Investment spending increases during periods of recession. 

18. Congress meets about every 6 - 8 weeks to discuss the performance of the economy and potential changes to fiscal policy. 

19. If there is more competition among firms, then the inflation rate will tend to increase. 

20.The demand for labor increases when the economy is in an expansionary phase. 

21. Total spending by the government is about 20% of GDP in the US economy. 

22. The unemployment rate decreases during periods of expansion. 

23. If oil prices increase by 20% then this is an example of a supply shock. 

24. When the Federal Reserve buys government bonds, interest rates are likely to fall. 

25. If Congress wanted to help the economy out of a recession, they would be most likely to reduce government spending and/or increase taxes. 

 

Falsenot in accordance with the fact or reality or actualityMore (Definitions, Synonyms, Translation)

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