Question

1. Automatic stabilizers are key elements of a.  neither monetary nor fiscal policies. b. monetary policies. c....

1. Automatic stabilizers are key elements of

a.  neither monetary nor fiscal policies.

b. monetary policies.

c. both monetary and fiscal policies.

d. fiscal policies.

2. Which of the following statements is correct about real GDP?

a. Real GDP is affected by the price levels used to calculate real GDP.

b. Nominal GDP is not affected by the amount of final goods and services that are newly produced

c. Real GDP is not affected by the amount of final goods and services that are newly produced.

d. Changes in real GDP is affected by the price levels used to calculate real GDP.

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Answer #2

ANSWER 1 - (D) FISCAL POLICIES

Automatic stablizers are economic policies and tax reforms which are implemented to bring the economy back on track without any government intervention. Since it includes the component of tax also...therefore the automatic stabalizers come under FISCAL POLICIES.

ANSWER 2- (C)

Real GDP is not affected by the amount of final goods and services that are newly produced.

The real GDP does not get changed due to any changes in the prices or the production level. Such changes are reflected in the Nominal GDP. The change in the prices of product or the change in production level will not affect the real GDP. These changes affect the inflation rates and nominal GDP only.

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