Exam 16: Fiscal Policy

A one-time tax rebate,which is not expected to be extended in future years,will

In a closed economy with fixed or autonomous (non-income dependent)taxes,the balanced budget government purchases multiplier equals one.

Tax increases on business income decrease aggregate demand by decreasing

A law requiring the government to balance its budget in each year would serve as an automatic destabilizer.

A study by Edward Prescott found that the ________ marginal tax rates in the United States relative to Europe resulted in a ________ quantity of labor supplied in the United States.

If the federal budget has an actual budget deficit of $100 billion and a cyclically adjusted budget deficit of $75 billion,then the economy

If the federal government's expenditures are less than its tax revenues,then

Table 27-2 -Refer to Table 27-2.Consider the hypothetical information in the table above for potential real GDP,real GDP and the price level in 2013 and in 2014 if the Congress and the president do not use fiscal policy.If the Congress and the president want to keep real GDP at its potential level in 2014,they should

The federal budget deficit acts as an automatic stabilizer because

A decrease in individual income taxes ________ disposable income,which ________ consumption spending.

What is the difference between federal purchases and federal expenditures?

An increase in government spending will force an appreciation of the dollar,which causes net exports to fall.

Suppose real GDP is $14 trillion and potential real GDP is $14.4 trillion.An increase in government purchases of $400 billion would cause real GDP to ________ potential real GDP (assuming a constant price level).

Figure 27-2 -Refer to Figure 27-2.In the graph above,suppose the economy is initially at point A.The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by the Congress and the president?

Which of the following statements about the Social Security,Medicare,and Medicaid programs is true?

In preparing their estimates of the stimulus package's effect on GDP,Obama administration economists estimated a government purchases multiplier of 1.57.This indicates that a ________ increase in government purchases would increase equilibrium real GDP by $157 billion

Prior to the 1930s,the majority of dollars spent by government was spent at the state and local levels.

President Bush lowered taxes on capital gains and dividends in 2003.Explain how this might increase aggregate supply.

The federal budget exhibited a $128.7 billion surplus in 2001 but moved to a deficit of $157.8 billion in 2002.Some argued the deficit was opened up because of the Bush 2001 tax cuts,but others argued that the deficit grew because of the recession suffered in 2001.Evaluate the validity of the second argument.

Which of the following would be considered an active fiscal policy?