Deliberate changes in government expenditures and taxes to influence GDP

A.

are enacted by the Council of Economic Advisers.

B.

are examples of automatic fiscal policy because the politicians automatically respond.

C.

operate without time lags.

D.

are forms of discretionary fiscal policy.

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The term? "stagflation" refers to the situation when

A.

real GDP and the price level both rise because of an increase in aggregate demand.

B.

prices become stagnant and do not increase or decrease.

C.the

 

shortminus run

 

aggregate supply curve and the aggregate demand curve shift in opposite directions.

D.

 

the aggregate supply curve shiftt leftward, prices increase and real GDP decreases.

 

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An increase in the income tax rate ________ employment and ________ potential GDP.

 

A.

 

increases; decreases

 

B.

 

decreases; increases

 

C.

 

decreases; decreases

 

D.

 

increases; increases