For Each of the Following Policies, Indicate Whether the Policy

question 29

Essay

For each of the following policies, indicate whether the policy is (1) a monetary or a fiscal policy, (2) an active or a passive policy, and (3) a policy by rules or with discretion:
a.The central bank follows a policy of allowing the money supply to grow at a constant 4 percent per year.
b.A government follows a policy of keeping government spending over a calendar year equal to government revenue over the calendar year.
c.The central bank uses judgment to adjust the growth of the money supply based on expectations of what will happen to output and inflation over the next five years.
d.The government keeps tax laws unchanging and allows government spending to change, depending on which spending bills are passed by the legislature.
e.The central bank follows a policy of adjusting the money supply according to a formula based on deviations of unemployment from the natural rate of unemployment.

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Definitions:

Deposit Method

An accounting approach used for recognizing revenue and expenses related to transactions where payment is received before the delivery of goods or services.

Sales Price

The amount of money for which a product or service is sold in the marketplace.

Significant Production

Significant production describes a level of manufacturing or output that markedly influences a company's overall capacity and inventory levels.

Revenue Recognition

The accounting rule that specifies the particular scenarios in which revenue is acknowledged or recorded.