Questions: Question 7 (5 points) Listen Which one of the following statements about discretionary fiscal policy is correct? A) Discretionary fiscal policy refers to deliberate changes in taxes and government expenditures made by Congress to stabilize the economy. B) Discretionary fiscal policy refers to the authority that the president has to change personal income tax rates. C) Discretionary fiscal policy refers to the changes in taxes and transfers that occur as GDP changes. D) Discretionary fiscal policy refers to any change in government spending or taxes that destabilize the economy. Question 8 (5 points) Listen If a nation imposes tariffs and quotas on foreign products, the immediate effect will be to A) increase efficiency in the world economy. B) reduce the rate of domestic inflation. C) reduce domestic output and employment. D) increase domestic output and employment.

Question 7 (5 points)
Listen

Which one of the following statements about discretionary fiscal policy is correct?
A) Discretionary fiscal policy refers to deliberate changes in taxes and government expenditures made by Congress to stabilize the economy.
B) Discretionary fiscal policy refers to the authority that the president has to change personal income tax rates.
C) Discretionary fiscal policy refers to the changes in taxes and transfers that occur as GDP changes.
D) Discretionary fiscal policy refers to any change in government spending or taxes that destabilize the economy.

Question 8 (5 points)
Listen

If a nation imposes tariffs and quotas on foreign products, the immediate effect will be to
A) increase efficiency in the world economy.
B) reduce the rate of domestic inflation.
C) reduce domestic output and employment.
D) increase domestic output and employment.

Transcript text: Question 7 (5 points) Listen Which one of the following statements about discretionary fiscal policy is correct? A) Discretionary fiscal policy refers to deliberate changes in taxes and government expenditures made by Congress to stabilize the economy. B) Discretionary fiscal policy refers to the authority that the president has to change personal income tax rates. C) Discretionary fiscal policy refers to the changes in taxes and transfers that occur as GDP changes. D) Discretionary fiscal policy refers to any change in government spending or taxes that destabilize the economy. Question 8 (5 points) Listen If a nation imposes tariffs and quotas on foreign products, the immediate effect will be to A) increase efficiency in the world economy. B) reduce the rate of domestic inflation. C) reduce domestic output and employment. D) increase domestic output and employment.

Solution

Answer

The answer to Question 7 is A) Discretionary fiscal policy refers to deliberate changes in taxes and government expenditures made by Congress to stabilize the economy.

Explanation

Option A: This statement is correct. Discretionary fiscal policy involves intentional actions by the government, typically through legislative measures, to adjust its spending and tax policies to influence economic conditions, such as stabilizing the economy during a recession or controlling inflation.

Option B: This statement is incorrect. The president does not have unilateral authority to change personal income tax rates; such changes typically require legislative approval by Congress.

Option C: This statement describes automatic stabilizers, not discretionary fiscal policy. Automatic stabilizers are mechanisms that naturally adjust taxes and transfers as GDP changes, without the need for new legislative action.

Option D: This statement is incorrect. Discretionary fiscal policy aims to stabilize, not destabilize, the economy through deliberate changes in government spending and taxes.

Answer

The answer to Question 8 is D) increase domestic output and employment.

Explanation

Option A: Imposing tariffs and quotas generally does not increase efficiency in the world economy. Instead, it can lead to inefficiencies by distorting market prices and reducing the benefits of comparative advantage.

Option B: Tariffs and quotas are not typically used to reduce the rate of domestic inflation. They can sometimes lead to higher prices for imported goods, potentially contributing to inflationary pressures.

Option C: Tariffs and quotas are designed to protect domestic industries by reducing foreign competition, which can lead to an increase, not a reduction, in domestic output and employment in the short term.

Option D: This statement is correct. By imposing tariffs and quotas, a nation can protect its domestic industries from foreign competition, potentially leading to an increase in domestic output and employment as local producers gain a larger share of the market. However, this effect may be temporary and can lead to retaliatory measures from other countries.

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