Question
Despite running consecutive budget deficits for the past 50 years, the United States government increased government expenditure during the 2008 crisis and again during the
Despite running consecutive budget deficits for the past 50 years, the United States government increased government expenditure during the 2008 crisis and again during the COVID crisis, increasing the magnitude of the budget deficits during those two periods. Such economic decisions characterize a __________.
Group of answer choices
a. Countercyclical fiscal policy.
b. Pro-cyclical fiscal policy.
c. Pro-cyclical monetary policy.
d. Balanced budget strategy.
During an economic boom, a country experienced all the following situations. Classify them as either discretionary fiscal policy, monetary policy, or automatic stabilizers.
I. Smaller government spending in unemployment benefits, due to the smaller level of unemployed people.
II. A budget increase for state-provided health care, due to the approval of a new legislation.
III. Open market operations by the Federal Reserve, aiming to decrease the circulation of money in commercial banks.
IV. An increase in the collection of taxes, due to the higher levels of profits and wages in the economy.
V. A constitutional change to create a new tax over inherited property.
Group of answer choices
a. I. automatic stabilizer, II. discretionary fiscal policy, III. monetary policy, IV. automatic stabilizer, V. discretionary fiscal policy.
b. I. automatic stabilizer, II. monetary policy, III. discretionary fiscal policy, IV. automatic stabilizer, V. discretionary fiscal policy.
c. I. automatic stabilizer, II. discretionary fiscal policy, III. discretionary fiscal policy, IV. automatic stabilizer, V. monetary policy.
d. I. discretionary fiscal policy, II. monetary policy, III. monetary policy, IV. automatic stabilizer, V. monetary policy.
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