Which of the Following Is an Example of Automatic Fiscal

question 132

Multiple Choice

Which of the following is an example of automatic fiscal policy?

• A) The government deliberately raises taxes.
• B) The government deliberately lowers taxes.
• C) The government deliberately increases spending.
• D) The government deliberately decreases spending.
• E) none of the above

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Definitions:

Surplus

The amount of an asset or resource that exceeds the portion that is actively utilized; in economic context, it often refers to excess production or budgetary surplus.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity, often to protect consumers.

Price Floor

A government or regulatory-imposed minimum price set for a particular good or service, below which it cannot be sold, often to protect producers or encourage production.

Surplus

The situation in which the quantity of a good or service supplied exceeds the quantity demanded at the existing price.