Question 1
Which of the following is an example of an expansionary fiscal policy?
◦ the Fed selling government securities in the open market
◦ the federal government increasing the marginal tax rate on incomes above $200,000
◦ the federal government increasing the amount of money spent on public health programs
◦ the federal government reducing pollution standards to allow firms to produce more output
Question 2
The objective of a contractionary fiscal policy is to
◦ reduce unemployment.
◦ increase growth in output.
◦ reduce inflation.
◦ increase stagflation.