5. (5 points) Which of the following would be classified as fiscal policy? a) The federal government passes tax cuts to encourage firms to reduce air pollution; b) The Federal Reserve cuts interest rates to stimulate the economy; c) A state government cuts taxes to help the economy of the state; d) The federal government cuts taxes to stimulate the economy; e) States increase taxes to fund education. 6. (5 points) When the economy enters into a recession, your employer is wages because to reduce your a) Unlikely; output and input prices generally fall during recession; b) Unlikely; lower wages reduce productivity and mora le; c) Likely; output prices always fall during recession; e) Likely; aggregate demand is vertical in the long run. 7. (5 points) Automatic stabilizers refer to. a) The money supply and interest rates that automatically increase or decrease along with the business cycle; b) Government spending and taxes that automatically increase or decrease along with the business cycle; c) Changes in the money supply and interest rates that are intended to achieve macroeconomic policy objectives; d) Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives. 8. (5 points) Before the Great Depression of the 1930s, the majority of government spending took place at the place at the and after the Great Depression the majority of government spending took a) State and local levels; federallevel; b) Local level; federal level; c) Federal level; state and local levels; d) Federal level; state level.
