Expansionary fiscal policy actions include
A) Increased defense spending. B) Increase government spending.
C) Cutting income taxes. D) All of the above.
Answer: D
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Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for solar panels if the government offers tax breaks to encourage manufacturers to produce more solar panels?
A) D increases, S no change, P and Q increase B) D no change, S increases, P decreases, Q decreases C) S increases, D no change, P decreases, Q increases D) D and S increase, P and Q decrease
Suppose Betty spends her monthly allowance on buying computer games, watching movies, and parasailing. If an increase in her monthly allowance increases her expenditure on parasailing activities we can say that:
a. parasailing is an inferior good. b. computer games are inferior goods. c. parasailing is a normal good. d. computer games are normal goods.
Refer to the figure above. The economy is at equilibrium at point B. What would expansionary fiscal policy do?
a. Move the economy from point B upward along AD2 b. Move the economy from point B towards point C c. Move the economy from point B downward along AD2 d. Move the economy from point B towards point A
Congress and the president carry out fiscal policy through changes in
A) interest rates and the money supply. B) taxes and the interest rate. C) government purchases and the money supply. D) government purchases and taxes.