Question

QUESTION 31

1. Legislative or administrative action taken by the government to alter the level of government spending or the tax structure is:

   		automatic stabilizers.
   		discretionary fiscal policy.
   		discount lending.
   		open market operations.

1 points   

QUESTION 32

1. The $800 billion stimulus package of the Obama Administration is an example of:

   		monetary policy.
   		congressional policy.
   		discretionary fiscal policy.
   		automatic stabilization policy.

Answer 1

Q31). The correct option is (b).

discretionary fiscal policy

As we know that, Discretionary fiscal policy represents changes in government spending and taxation that need specific approval from Congress and the President. Examples include increases in spending on roads, bridges, stadiums, and other public works. Discretionary fiscal policy differs from automatic fiscal stabilizers. These automatic stabilizers take place when, during a recession, a government automatically spends more because the economy forces more people to claim unemployment benefits. However, the government may find these automatic stabilizers to be inadequate to deal with major issues, imbalances, and instabilities in the economy. This will lead them to intentionally increase public works spending schemes as well.

Q32). The correct option is (a).

Monetary policy.

The stimules plan of $800 by Barack Obama is Officially called the American Recovery and Reinvestment Act, the $800 billion stimulus was the largest economic recovery program in history. Adjusted for inflation, it was nearly five times more expensive than the Works Progress Administration. The stimulus was supposed to work like this: First, a flood of money in tax cuts, food stamps and unemployment checks would get consumers spending. A deluge of education and health-care money would stanch the bleeding in state budgets.