Discretionary fiscal policy to stimulate the economy includes ________
A. lowering the tax rate paid by households with middle incomes
B. raising the tax on gasoline
C. the fall in tax revenue as the economy goes into recession
D. the rise in tax revenue collected from businesses as their profits in-crease
A Answer A is discretionary fiscal policy because it requires an act of Congress. It is an expansionary policy because it is de-signed to increase consumption expenditure and hence ag-gregate demand.
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Cyclical unemployment is:
A. long-term and chronic unemployment that exists even when the economy is producing at a normal rate. B. short-term unemployment that is associated with the process of matching workers with jobs. C. the additional unemployment not captured in official statistics resulting from discouraged workers and involuntary part-time workers. D. the extra unemployment that occurs during periods of recession.
When a tax is imposed on a good, at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost
A) equals B) is greater than C) is less than D) can be calculated but is not comparable to E) The premise of the question is incorrect because after a tax is imposed, it becomes impossible to determine the marginal benefit and the marginal cost.
All else constant, an increase in the incomes of consumers in the market for diamonds would cause the supply of diamonds to increase
Indicate whether the statement is true or false
Refer to Figure 10.2. At output Qm, and assuming that the monopoly has set her price to maximize profit, the consumer surplus is:
A) CDE. B) BDEF. C) ADEG. D) 0DEQm. E) none of the above