Active policy making refers to nondiscretionary policy making. relying on policies that act as automatic stabilizers. actions taken by policy makers in response to or in anticipation of some change in the overall economy. policy making that is carried out in response to a rule.

Which of the following statements about automatic stabilizers in Canada is the most accurate? They are the responsibility of the provinces since they, unlike the federal government, do not face lag problems. They are controlled by the Bank of Canada to help manage the business cycle. They are able to completely eliminate all the lag problems associated with fiscal policy. They are changes in government transfer payments and tax revenues that vary automatically and inversely to business cycle changes.

Suppose that the government decreases spending more than is necessary to close an inflationary gap. What is the MOST likely result? Inflation will increase. The price level will increase. Aggregate output will fall short of potential output. Aggregate output will increase.

income taxes and government spending during a recession. Automatic stabilizers increase; increase increase; decrease decrease; increase decrease; decrease

Which of the following would not be considered an automatic stabilizer?   Question 13 options:   Income tax   Unemployment compensation   Education spending   Food stamps

Which of the following is an example of an automatic stabilizer? tax rates the MPC the amount of dollars collected in taxes interest rates

The rational expectations theory suggests that as the public learns more about the effects of fiscal and monetary policy, in the pursuit of their own self interest they take actions that make     Group of answer choices monetary policy more powerful than fiscal policy. fiscal policy more powerful than monetary policy. fiscal and monetary policy ineffective in achieving their stated aims. fiscal and monetary policy effective in achieving their stated aims.

Let’s assume that the economy in the United States is higher than the potential GDP. If the government uses a contractionary fiscal policy to decrease GDP, the: Group of answer choices aggregate demand curve will shift to the right. aggregate supply curve will shift to the left. aggregate supply curve will shift to the right. aggregate demand curve will shift to the left.

Suppose that an economy is in equilibrium at a level of output of $600 million. Suppose further that the full employment level output is $2000 million. What can the President along with Congress do in order to attain the full employment output? Group of answer choices Increase the taxes. Decrease the taxes. Sell government securities. Decrease the government spending.

The 'automatic mechanism' can best be described as using fiscal or monetary policies to stabilize the economy when it is not at potential. how the economy returns to potential GDP without any policy action. the result of monetary policy implemented by the Fed restoring full employment. how fiscal policy is used to return the economy to its potential.