1. How could the Congress use fiscal policy to expand the economy during a Recession?

2. Identify and explain one step the Federal Reserve might take contract the economy in order to slow inflation.

What is the "current macroeconomic situation" (e.g. worrying aboutinflation and/or recession) in the U.S.? What should the U.S.Congress and the Federal Reserve do about it?

Question: [1] What is the "current macroeconomic situation" (e.g.worrying about inflation and/or recession) in the U.S.? [2] Whatshould the U.S. Congress and the Federal Reserve do about it?

1. Discretionary fiscal policy refers to:

A. Any change in government spending or taxes that destabilizes the economy.

B. The authority that the President has to change personal income tax rates.

C. Intentional changes in taxes and government expenditures made by Congress to stabilize the economy.

D. The changes in taxes and transfers that occur as GDP changes.

2. Countercyclical discretionary fiscal policy calls for:

A. Surpluses during recessions and deficits during periods of demand-pull inflation.

B. Deficits during recessions and surpluses during periods of demand-pull inflation.

C. Surpluses during both recessions and periods of demand-pull inflation.

D. Deficits during both recessions and periods of demand-pull inflation.

3. Contractionary fiscal policy is so named because of it:

A. Involves a contraction of the nation's money supply.

B. Necessarily reduces the size of government.

C. Is aimed at reducing aggregate demand and thus achieving price stability.

D. Is expressly designed to expand real GDP.