1 - When has deficit financing been justified?

a) to decrease taxes

b) to increase in defense spending

c) to increase in the use of automatic stabilizers

d) to increase the economy's productivity

e) to increase in transfer payments

2 - Discretionary expansionary fiscal policy may lead to all of the following, except

a) decreased national saving.

b) decreased unemployment.

c) inflation.

d) lower interest rates.

e) crowding out.

3 - A decrease in net taxes

a) raises aggregate expenditure by raising disposable income, thereby increasing consumption

b) raises aggregate expenditure by raising disposable income, thereby Decreasing consumption

c) lowers aggregate expenditure by lowering disposable income, thereby Decreasing consumption

d) lowers aggregate expenditure by lowering disposable income, consumption remaining constant

e) has no effect of aggregate expenditure.