$)$ During the $2008-2010$ recession, the Canadian government introduced its fiscal expansionary $“$Economic Action Plan$”$ to stimulate the Canadian economy. For this time period, we can conclude that the budget balance $($BB$)$ of Canada will $\_\_\_\_$ and the structural budget balance $($SBB$)$ of Canada will $\_\_\_.$ For simplicity, assume that BB$=$SBB$=0$ before $2008.$

Decrease; decrease

Decrease; stay constant

Increase; stay constant

Increase; decrease

b$)$ Assume that the tax rate t is $0\mathrm{.}25,$ Yp is $1,000$ and G is $200.$ Which of the following statements is CORRECT?

The structural budget balance is $50$

There will be zero budget balance when Y is $900$

If Y increases, the structural budget balance will increase

With negative GDP gap of $25\%,$ the budget balance is $0$

c$)$ For a given fluctuation in autonomous expenditure, economies with higher income tax rate t will:

Experience some business cycle fluctuations in real GDP and employment but the fluctuations are independent of t

Experience no business cycle fluctuations in real GDP and employment

Experience larger business cycle fluctuations in real GDP and employment only if the government runs a balanced budget

Experience smaller business cycle fluctuations in real GDP and employment

d$)$ Which of the following best describe$($s$)$ automatic built$-$in stabilizers in Canada?

The lower our income tax rates, the stronger are the automatic stabilizers, and the more stable is our GDP

The size of the autonomous goods market multiplier varies inversely with the level of GDP

Autonomous government spending automatically rises as GDP falls

The higher our income tax rates, the stronger are the automatic stabilizers, and the more stable is our GDP

e$)$ The government's budget balance depends on:

The level of potential output determined by the labour force, the capital stock and technology

Canada's imports and exports of goods and services

The tax rates, expenditures set by government and the level of GDP determined by AD$=$AS

The tax rate set by government and government expenditure on goods and services

f$)$ For a given change in autonomous expenditure, economies with lower income tax rate t will:

Experience larger business cycle fluctuations in real GDP and employment

Experience smaller business cycle fluctuations in real GDP and employment

Experience no business cycle fluctuations in real GDP and employment

Experience larger business cycle fluctuations in real GDP and employment only if the government runs a balanced budget

g$)$ If the tax rate t rises, then:

The BB line will shift upward with no change in slope

The BB line will pivot downward, making it flatter

The BB line will pivot upward, making it steeper

The BB line will shift downward with no change in slope

h$)$ The actual $($observed$)$ government balance depends simply on:

Government net tax rates, government expenditures on goods and services and the actual level of nominal GDP

Government expenditures on goods and services

The net tax rates set by the government

Government support for social programs and national defense

i$)$ Suppose we observe that the government has an actual budget deficit of $$20$ billion. What can we conclude?

Discretionary fiscal policy was contractionary

The economy was in a recession

Discretionary fiscal policy was expansionary

We cannot identify the current state of discretionary fiscal policy

j$)$ When does public debt accumulate?

When discretionary fiscal policies are contractionary

When budget balance becomes more positive

When the economy is in an economic boom

When budget balance becomes more negative