1 ? Perfect prep for Tax and Fiscal Policy quizzes and tests you might have in school. Because this affect C, not direct and possibly I. Fiscal policy is changes in government spending and taxes to fight recessions or inflation. b. Grades 9-12. Banks will have to charge more for loans. the government spending and its taxation rates. By the time the policy is implemented, the economic situation could be different. Econ 98-Chiu Quiz 10: Fiscal and Monetary Policy Spring 2004 Name & SID: Date: Page 4 of 12 4. 1. crowding out of private investment by increasing interest rates and therefore reducing the economies long run rate of growth. Because one year's debt effects the others, what is the best way for the government to deal with their budgets? debt may rise to the point where the government defaults--> causes financial and economic turmoil. Monetary policy, unlike fiscal policy, does not have any time lags. You will receive your score and answers at the end. What is the difference in effect of spending vs. taxes? Question 169. An example of expansionary fiscal policy would be. | 14 What two main problems do persistent government deficiets cause? Both increasing G and decreasing taxes, two examples of expansionary fiscal policy, may lead to... it depends on the MPC because consumers do not necessarily spend all of the money that they get to keep. Two words you'll hear thrown a lot in macroeconomic circles are monetary policy and fiscal policy. {{courseNav.course.mDynamicIntFields.lessonCount}} lessons Enrolling in a course lets you earn progress by passing quizzes and exams. a) Currency and gold reserves b) Money and credit was used as a review for ECON 3 at the University of California at San Diego. t. f. tutor2u. answer choices . C. calculating the federal debt. Governments, therefore, should offset budget deficits in some years with budget surpluses in others to have a budget that is balanced on average. 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