Exam 22: Fiscal Policy: a Summing up

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If the government runs a primary deficit in year zero of B₀,and decides to repay it in year t (i.e.,bring the debt back down to its pre-existing level),then in year t it must run a primary surplus equal to

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Question 1

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Since the early 1980s,debt ratios for the OECD countries have

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Question 2

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For this question,assume that Ricardian Equivalence proposition does not hold.Briefly discuss the short-run,medium-run and long-run effects of a fiscal expansion (e.g.tax cut).

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Answers could be quite long.In the short run,fiscal policy can affect the level of output,the composition of output,the price level,and financial market variables.In the medium run,changes in fiscal policy will not affect the level of output; however,they will affect the composition of GDP and financial market variables.So,a fiscal expansion would have no effect on output in the medium run.In the long run,fiscal policy will affect output.It will do so by affecting the level of national saving.

The primary deficit is represented by which of the following?

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Question 4

The deficit (as a fraction of GDP)is anticipated to rise over the next several decades due to projections of

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Question 5

What are the factors that will determine the size of some future required tax increase to pay off all debt?

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Question 6

Explain the economic costs of hyperinflation.

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Question 7

The difference between the official and correct measures of the deficit will be greater,

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Question 8

"Debt repudiation" occurs when

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Question 9

If the government thinks the natural unemployment rate is 5%,when it is really 6%,then the government will

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Question 10

Explain the macroeconomic effects of a tax cut according to the Ricardian Equivalence proposition.Include in your answer the IS-LM graph that shows the effects of this tax cut.

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Question 11

The debt ratio will increase by more in any given year when

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Question 12

When a government partially defaults its debt,a "haircut" of 20% means that

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Question 13

The correct measure of the deficit is also called

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Question 14

Which of the following is an entitlement program?

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Question 15

The effect of changes in economic activity on the budget deficit is called

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Question 16

A rule of thumb is that a 1% increase in output leads automatically to a reduction in the deficit of what percentage of GDP?

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Question 17

First,define and explain the cyclically adjusted deficit.Second,explain what effect a recession caused,for example,by a reduction in consumer confidence will have on the size of the cyclically adjusted deficit.

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Question 18

The official measure of the deficit becomes more inaccurate as

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Question 19

The "official measure" of the deficit (the one reported by the government)

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Question 20

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Exam 22: Fiscal Policy: a Summing up

If the government runs a primary deficit in year zero of B₀,and decides to repay it in year t (i.e.,bring the debt back down to its pre-existing level),then in year t it must run a primary surplus equal to

Since the early 1980s,debt ratios for the OECD countries have

For this question,assume that Ricardian Equivalence proposition does not hold.Briefly discuss the short-run,medium-run and long-run effects of a fiscal expansion (e.g.tax cut).

The primary deficit is represented by which of the following?

The deficit (as a fraction of GDP)is anticipated to rise over the next several decades due to projections of

What are the factors that will determine the size of some future required tax increase to pay off all debt?

Explain the economic costs of hyperinflation.

The difference between the official and correct measures of the deficit will be greater,

"Debt repudiation" occurs when

If the government thinks the natural unemployment rate is 5%,when it is really 6%,then the government will

Explain the macroeconomic effects of a tax cut according to the Ricardian Equivalence proposition.Include in your answer the IS-LM graph that shows the effects of this tax cut.

The debt ratio will increase by more in any given year when

When a government partially defaults its debt,a "haircut" of 20% means that

The correct measure of the deficit is also called

Which of the following is an entitlement program?

The effect of changes in economic activity on the budget deficit is called

A rule of thumb is that a 1% increase in output leads automatically to a reduction in the deficit of what percentage of GDP?

First,define and explain the cyclically adjusted deficit.Second,explain what effect a recession caused,for example,by a reduction in consumer confidence will have on the size of the cyclically adjusted deficit.

The official measure of the deficit becomes more inaccurate as

The "official measure" of the deficit (the one reported by the government)

A Tour of the World

A Tour of the Book

The Goods Market

Financial Markets

Goods and Financial Marketsthe Is-Lm Model

Financial Markets Ii: the Extended Is-Lm Model

The Labor Market

The Phillips Curve, the Natural Rate of Unemployment, and Inflation

From the Short to the Medium Run: the Is-Lm-Pc Model

The Facts of Growth

Saving, capital Accumulation, and Output

Technological Progress and Growth

Technological Progress: the Short, the Medium, and the Long Run

Financial Markets and Expectations

Expectations, consumption, and Investment

Expectations, output, and Policy

Openness in Goods and Financial Markets

The Goods Market in an Open Economy

Output, the Interest Rate, and the Exchange Rate

Exchange Rate Regimes

Should Policy Makers Be Restrained

Monetary Policy: a Summing up

Epilogue: the Story of Macroeconomics

Appendix

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