Exam 19: Debates in Macroeconomics Over the Role and Effects of Government

Elasticity of investment measures the responsiveness of

There are economists who believe that some types of government spending are better for the economy than other types of spending.

Two economists,A and B,believe that the economy currently needs a strong dose of expansionary fiscal policy.Economist A wants to cut taxes while economist B wants to raise government spending.It is probably the case that

A $100 billion increase in government spending increases Real GDP by $800 billion.Assuming a constant price level,what does the government spending multiplier equal?

Economist A believes that if tax rates are cut,tax revenue is likely to rise.This economist most likely believes that

If tax rates are cut,tax revenues may rise,fall,or remain unchanged.What actually happens is considered a(n)

Economist A argues that a "dollar spent is a dollar spent." This economist is most likely to agree with which of the following:

The choice between increasing government spending and cutting taxes often is related to

Economist C says all of the following: Expansionary fiscal policy is needed to raise aggregate demand and remove the economy from a recessionary gap.The choice of fiscal policy measures is between ________________ government spending and a _______________ in taxes.Since I am in favor of bigger government,I choose a(n)_________________ in _________________.

"Politics is too often the thing that gets in the way of good economic policy being implemented." The economist who said this most likely

If wages are flexible,it is very likely that government intervention will be needed to push the economy out of a recessionary gap.

Which of the following is false?

A $40 billion reduction in taxes increases Real GDP by $120 million.Assuming a constant price level,what does the tax multiplier equal?

Which of the following is an empirical issue?

If the (average)tax rate falls by 10% and as a result the tax base rises by 8%,then tax revenues will

Those economists who believe that the economy is self-regulating argue that wages are flexible,so they think that the economy can remove itself from a recessionary gap without government intervention.

If the (average)tax rate falls by 20% and as a result the tax base rises by 20%,tax revenues will

The Taylor Rule is an example of

Economists who asset that the AS curve is vertical believe that changes in Real GDP originate only on the _____________of the economy;so government policy that is intended to impact the ____________________ of the economy will change only ______________,not ________________.

A $10 billion reduction in taxes increases Real GDP by $90 billion.Assuming a constant price level,what does the tax multiplier equal?