When a Government Changes Its Fiscal Policy, It Is

question 91

Multiple Choice

When a government changes its fiscal policy, it is

• A)increasing the money supply to increase national income.
• B)using government spending and taxes together with changing the money supply in order to achieve full employment.
• C)buying and selling private bonds to increase or decrease the overnight lending rate.
• D)changing tax rates to change national income.
• E)changing government spending and/or tax rates to change national income.

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Definitions:

Marginal Physical Product

The additional output that can be produced by adding one more unit of a specific input, while holding other inputs constant.

Additional Output

The extra amount of production generated as a result of increasing inputs or improving efficiency.

Productivity

A measure of the efficiency of production, often expressed as the ratio of outputs to inputs in a production process.

Per Unit

A measurement specific to one unit of a good or service, indicating cost, price, or quantity related to a single unit.