11 ECON 104|very helpful during revision

Student: ___________________________________________________________________________ 1. Fiscal policy is carried out primarily by: A. the federal government. B. provincial and local governments working together. C. provincial governments alone. D. local governments alone. 2. Discretionary fiscal policy refers to: A. any change in government spending or taxes which destabilizes the economy. B. the authority which Parliament has to change personal income tax rates. C. changes in taxes and government expenditures made by Parliament to stabilize the economy. D. the changes in taxes and transfers which occur as GDP changes. 3. Fiscal policy refers to the: A. manipulation of government spending and taxes to stabilize domestic output, employment, and the price level. B. manipulation of government spending and taxes to achieve greater equality in the distribution of income. C. altering of the interest rate to change aggregate demand. D. fact that equal increases in government spending and taxation will be contractionary. 4. "Discretionary" fiscal policy is so named because it: A. is undertaken at the option of the nation's central bank. B. occurs automatically as the nation's level of GDP changes. C. involves specific changes in T and G undertaken expressly for stabilization purposes at the option of Parliament. D. None of these. 5. Expansionary fiscal policy is so named because it: A. involves an expansion of the nation's money supply. B. necessarily expands the size of government. C. is aimed at achieving greater price stability. D. is designed to expand real GDP. 6. If the government wishes to increase the level of real GDP, it might reduce: A. taxes. B. transfer payments. C. the size of the budget deficit. D. its purchases of goods and services. 7. In an aggregate demand and aggregate supply graph, an expansionary fiscal policy can be illustrated by a: A. leftward shift in the aggregate demand curve. B. rightward shift in the aggregate demand curve. C. leftward shift in the aggregate supply curve. D. change in the price level. 8. If the MPS in an economy is .1, government could shift the aggregate demand curve rightward by $40 billion at each price level by: A. increasing government spending by $4 billion. B. increasing government spending by $40 billion. C. decreasing taxes by $4 billion. D. increasing taxes by $4 billion. 9. If the MPC in an economy is .8, government could shift the aggregate demand curve rightward by $100 billion at each price level by: A. increasing government spending by $25 billion. B. increasing government spending by $80 billion. C. decreasing taxes by $25 billion. D. decreasing taxes by $100 billion. 10. If a government wants to pursue an expansionary fiscal policy, then a tax cut of a certain size will be more expansionary the: A. smaller is the economy's MPS. B. larger is the economy's MPS. C. smaller is the economy's MPC. D. larger is the unemployment rate. 11. An economy is experiencing a high rate of inflation. The government wants to reduce GDP by $36 billion to reduce inflationary pressure. The MPC is .75. By how much should the government raise taxes to achieve its objective? A. $6 billion B. $9 billion C. $12 billion D. $16 billion 12. In an economy, the government wants to increase aggregate demand by $50 billion at each price level to increase real GDP and reduce unemployment. If the MPS is .4, then it could increase government spending by: A. $10 billion. B. $20 billion. C. $31.25 billion. D. $40.50 billion. 13. In an economy, the government wants to increase aggregate demand by $60 billion at each price level to increase real GDP and reduce unemployment. If t