Multiple Choice Quiz


1	If the Congress and President agree a tax cut is necessary to stimulate an economy in recession then they are engaging in
		A)	monetary policy.
		B)	nondiscretionary fiscal policy.
		C)	expansionary discretionary fiscal policy.
		D)	contractionary discretionary fiscal policy.


2	If the Congress and President agree a building program is necessary to stimulate an economy in recession then they are engaging in
		A)	monetary policy.
		B)	nondiscretionary fiscal policy.
		C)	expansionary discretionary fiscal policy.
		D)	contractionary discretionary fiscal policy.


3	The automatic reactions of the federal income tax code and the provisions of the welfare state are the elements of
		A)	monetary policy.
		B)	nondiscretionary fiscal policy.
		C)	expansionary discretionary fiscal policy.
		D)	contractionary discretionary fiscal policy.


4	Expansionary Discretionary Fiscal Policy
		A)	shifts the aggregate demand curve to the right.
		B)	shifts the aggregate supply curve to the left.
		C)	shifts the aggregate demand curve to the left.
		D)	shifts the aggregate supply curve to the right.


5	Contractionary Discretionary Fiscal Policy
		A)	shifts the aggregate demand curve to the right.
		B)	shifts the aggregate supply curve to the left.
		C)	shifts the aggregate demand curve to the left.
		D)	shifts the aggregate supply curve to the right.


6	An economic event that reduces consumer confidence is called an
		A)	aggregate demand "inhibitor."
		B)	aggregate demand "shock."
		C)	aggregate supply "shock."
		D)	aggregate supply "inhibitor."


7	An economic event that threatens oil supplies is called an
		A)	aggregate demand "inhibitor."
		B)	aggregate demand "shock."
		C)	aggregate supply "shock."
		D)	aggregate supply "inhibitor."


8	The fact that the recession of 2001-2002 began, according to the economists who put a date on such things, in March of 2001 and we did not know that until November of 2001 is an example of
		A)	the measurement lag.
		B)	the recognition lag.
		C)	the administrative lag.
		D)	the operational lag.


9	The fact that in 2001 and 2002 a Senate controlled by the Democrats held-up President Bush's stimulus package is an example of
		A)	the measurement lag.
		B)	the recognition lag.
		C)	the administrative lag.
		D)	the operational lag.


10	Besides lags in implanting discretionary fiscal policy, economists also site _____ as reasons to doubt the wisdom of such policy.
		A)	the political tendency to stimulate the economy in time to influence elections
		B)	the political tendency to avoid contractionary policy when it is needed while engaging in expansionary policy when it is needed
		C)	the economic tendency of people to immediate spend money they receive
		D)	a) and b)

2003 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Policy.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.