Question

1. Increasing government spending when the economy is in a recession is an example of: a....

1. Increasing government spending when the economy is in a recession is an example of:

a. active monetary policy.

b. active fiscal policy.

c. passive monetary policy.

d. passive fiscal policy.

2. Because monetary and fiscal lags are long and variable:

a. stronger policies must be used.

b. successful stabilization policy is completely impossible.

c. attempts to stabilize the economy are often destabilizing.

d. policy must be completely passive.

3. The knowledge and skills that workers have built up through education and training programs is known as ________.

a. the college premium

b. human capital

c. productivity

d. financial torsion

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Answer #1

Answer Option B ) Active fiscal policy

Increasing government spending when the economy is in a recession is an example of active monetary policy. The reason is that in active fiscal policy government takes initiative to incur expenditure and change taxes to save economy from negative fluctuations.

Answer 3 Option B) Human capital

The knowledge and skills that workers have built up through education and training programs is known as human capital. The reason is that with education and training their abilities and strength can be built and can be a capital for the nation.

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