When We Compare Fiscal Policies Over Time and Across Countries

question 137

Multiple Choice

When we compare fiscal policies over time and across countries, we find that government spending as a fraction of GDP

• A) is much larger in the United States than in western Europe.
• B) has followed similar growth patterns in all industrial nations.
• C) is a function of fluctuations in the business cycle.
• D) has fallen in all industrial countries since the 1970s.
• E) is a poor reflection of a country's economic progress.

---

Definitions:

Leisure

Free time when one is not working or occupied; time available for ease, relaxation, and activities one enjoys.

Substitution Effect

Changes in what consumers purchase, brought about by alterations in the relative costs of goods, persuading consumers to opt for alternatives over their usual choices.

Income Effect

The correlation between income changes in an economy or for individuals and their effect on the quantity of goods and services demanded.

Opportunity Cost

The value of the next best alternative that is foregone when a decision is made to choose one option over another.