Question
Please help by answering the following question! Suppose that the federal government undertakes fiscal policy designed to increase government spending by $100 B and state
Please help by answering the following question!
Suppose that the federal government undertakes fiscal policy designed to increase government spending by $100 B and state and local governments cut their budgets due to falling tax revenue? What have state and local government actions done to the effectiveness of federal fiscal policy?
a. State and local government changes have not affected the federal government's policy.
b. State and local government changes have reinforced and strengthened the federal government's policy. c. State and local government changes have opposed and weakened the federal government's policy.
The government can finance additional spending in one of three ways: borrowing from the public by selling them newly issued bonds, increasing taxes or monetization: What is monetization?
a. The FED buying existing U.S. bonds from the public
b. selling new bonds directly to the FED c. borrowing from private banks (loans)
d. selling gold reserves
Economists generally believe that a federal Balanced Budget Amendment would:
a. create a more stable economy and pay off the debt faster
b. make recessions shorter and control inflation better
c. make recessions deeper and inflation higher
Initially, demand-side inflation:
a. decreases GDP, increases unemployment and causes prices to rise. b. increases GDP, decreases unemployment and causes prices to fall.
c. increases GDP, decreases unemployment and causes prices to rise.
d. decreases GDP, decreases unemployment and causes prices to rise
When OPEC raised prices drastically in the 1970s, it caused a negative supply shock. Negative supply shocks result in:
a. rising GDP, rising prices and fallng unemployment
b. rising GDP, falling prices and falling unemployment
c. falling GDP, rising prices and rising unemployment
d. falling GDP, falling prices and rising unemployment
Bad storms (especially in geographically small counties), eruptions of volcanoes, outbreaks of wars and earthquakes are all possible causes of
a. negative supply shocks
b. negative demand shocks
c. positive supply shocks
d. positive demand shocks
When 9/11 occurred, people felt hopeless and afraid. They decreased their spending and canceled trips on planes and cruise ships. They saved more because they expected times to get worse. This was an example of the:
a. supply-side inflation
b. a negative demand shock c. demand side inflation d. a negative supply shock
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