An expansionary fiscal policy can increase the level of aggregate demand by reducing corporate tax rates to increase investment spending. reducing grants to state and local governments. decreasing government purchases.
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- An equal increase in government purchases and taxes will cause an increase in real GDP. no change in real GDP. an increase in the budget surplus. a reduction in cyclically adjusted budget surplus.the impact of fiscal policy on the aggregate price level, unemployment and incomeGovernment spending in the federal budget that Congress can adjust as it wishes is called
- Describe the shortcomings of Fiscal Policy. Be as thorough as possible.Fiscal policy determines the level of interest rates.True or FalseExpansionary fiscal policy Group of answer choices can be effective in the long run. causes complete crowding out in the short run. is never effective because of crowding out. can be effective in the short run.
- Which of the following is a benefit of government debt? Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. Debt prevents the import-export ratio from exceeding transfer payments. The ability to pay for investments that lead to economic growth. Debt allows flexibility in offsetting an economic shock. Borrowing tends to increase wages and keep inflation rates stable.Evaluate the effectiveness of fiscal policy as a tool to reduce unemployment.Expansionary fiscal policy is so named because it: involves an expansion of the nation's money supply. necessarily expands the size of government. is aimed at achieving greater price stability. is designed to expand real GDP.
- Expansionary fiscal policy occurs when the government decreases spending or increases taxes to stimulate the economy toward expansion. True or FalseExplain the instuments of Fiscal policy.Which of the following would be classified as fiscal policy? The federal government passes tax cuts to encourage firms to reduce air pollution. The Federal Reserve cuts interest rates to stimulate the economy. A state government cuts taxes to help the economy of the state. The federal government cuts taxes to stimulate the economy. States increase taxes to fund education.