1. The tax increases necessary to fund future Social Security and Medicare benefit payments would be
A. large, and could discourage work effort, entrepreneurship, and investment, thereby slowing economic growth.
B. small, and have little effect on economic growth.
C. large, but would have little effect on economic growth.
D. small, but could discourage work effort, entrepreneurship, and investment, thereby slowing economic growth.
2. Active changes in tax and spending by government intended to smooth out the business cycle are called ________, and changes in taxes and spending that occur passively over the business cycle are called ________.
A. discretionary fiscal policy; automatic stabilizers
B. automatic stabilizers; monetary policy
C. discretionary fiscal policy; conscious fiscal policy
D. automatic stabilizers; discretionary fiscal policy