Which of these best captures the objective of an active fiscal policy?

To achieve and then maintain full employment

To increase the long$-$run rate of economic growth

To ensure that the government's budget balance is zero

To reduce economic fluctuations across the course of the business cycle

Which of the following is NOT a definition of equilibrium in the circular flow model?

Aggregate supply equals aggregate demand

Total withdrawals equal total injections

Y $=$ C $+$ I $+$ G $+$ X $-$ M

National income equals aggregate expenditure

With an expenditure multiplier of $2\mathrm{.}5,$ the government and the central bank could close a recessionary gap of $5$bn by

Requiring banks to hold $5$bn more of liquid assets

Increasing the money supply by $12\mathrm{.}5$bn

Cutting its spending by $12\mathrm{.}5$bn

Increasing its spending by $2$bn

If the central bank purchases government bonds from monetary financial institutions, then we expect that

The money supply will increase

Lending will decrease

Investment will fall

Interest rates will rise