Question

Please answer this and thank you!

Which of the following would be considered as a contractionary fiscal policy? *

a) A decrease in the money supply

b)An increase in government taxation

c)An increase in government expenditure

d)A decrease in the VAT rate

If consumers spend 90 cents out of every dollar received, the *

a) MPS is 0.10

b) MPC is 0.90

c) Multiplier is 10

d) All of the above

What is true about Fiscal Policy? *

a)Is a policy used by the central bank to control the money supply

b)Is a policy used by the government to achieve economic goals

c)Its tools are change in government spending and/ or change in taxes

d) Both (b) and (c)

Answer 1

Answer 1 is B.....

When govt adopt contractionary fiscal policy govt spending is less and govt revenue increase.

When govt tax rate increase and new tax impose so govt revenue increase.

Answer 2 is B....90/100= 0.90

Marginal propensity to consume= 1- mps

In this statement consumption is 90% and save 10 % of total income.

Answer 3 is D.... fiscal policy is the govt tool for govt revenue and spending fir public welfare

Govt achieve our goal with the help of this tool.

Like equality in education, health and GDP per capita.

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