Exam 11: Managing Aggregate Demand: Fiscal Policy

If a state government reduces property taxes for residents at the same time that it increases the state income tax,what will happen to the expenditures schedule of the residents of this state?

Which of the following is a correct conclusion regarding the successful implementation of fiscal policy?

Raising taxes or increasing transfer payments would reduce total spending.

Suppose that the U.S.personal income tax was eliminated and replaced with a fixed tax that raised the exact same amount of revenue.The multiplier would be

A conservative who was opposed to an increase in the size of the government sector but believed in the Keynesian approach to aggregate demand management would most likely favor which of the following expansionary policies?

Increasing aggregate demand with fiscal policy may have undesirable inflationary consequences.

If personal income taxes are increased,disposable income and consumption

An automatic stabilizer is a feature of the economy that

If wealthy U.S.consumers save most of their tax cut,this means that,compared to government spending changes,

The oversimplified formula for the multiplier is misleading because it ignores the effects of

Which of the following statements would appeal to someone who favors an expanded public sector as the basis of expansionary fiscal policy?

There is some agreement between the beliefs of President George W.Bush in 2001 on the effectiveness of tax cuts with the beliefs of former President

When government increases a fixed tax,consumption schedule

In the short run,tax cuts that are intended to increase aggregate supply have

How does the multiplier for a change in government spending compare to the multiplier for a change in taxes?

Taxes reduce total spending

Taxes constitute the difference between GDP and disposable income.

Decreasing aggregate demand to eliminate an inflationary gap often creates the problem of

Historically,the government has used fiscal policy to affect the economy through

If the economy experiences an unplanned inventory accumulation at the full employment level of GDP,then the economy is in a(n)