Question

.

Which of the following are concerns regarding expansionary fiscal policy, i.e. the increase in government spending and decreases in taxes

a. it will decrease wages

b. It will create an asset bubble

c. it will cause deflation

d. It will increase budget deficits and the national debt

2.

Savings Accounts are part of which stock of money?

a. M2

b. Monetary base

c. All of the above

d. M1

3.

The main goal of monetary policy is to

a. Keep a constant exchange rate of the dollar

b. Keep prices stable and achieve maximum employment

c. Keep interest rates as low as possible

d. Keep a balanced federal budget

Answer 1

1.Expansionary fiscal policy creates budget deficit and national debt.Government borrows from either the central bank or some other institution or government to finance the deficit budget which increases debt.Due to greater spending the government expenditure is more than receipts,so there is a budget deficit.

Answer-d

2.M2 includes savings accounts

Answer-a.

3.The aim of the monetary policy is to keep the economy in equilibrium and maintain a stable price level and employment level.

Answer-b