Exam 13: Fiscal Policy

An income tax potential GDP by shifting the labor _ curve _.

Which component makes up the largest part of government outlays in the federal budget?

Assuming there are no supply- side effects, an increase in government expenditures the AD curve and the SAS curve.

A change in autonomous taxes _ _ a multiplier effect because it which, in turn, Consumption expenditure.

Which has a larger effect on aggregate demand: an increase in government expenditure or an equal sized decrease in autonomous taxes? Explain your answer.

In the short run, an increase in autonomous taxes will I. shift the aggregate demand curve leftward. II. decrease real GDP. III. increase the government purchases multiplier. IV. increase the autonomous tax multiplier.

Suppose real GDP exceeds potential real GDP. If the government decreases its expenditures on goods and services, then real GDP and the price level _ .

The the interest rate, the _ the present value of a given future amount.

What are examples of expansionary and contractionary fiscal policies? Name two of each.

Induced taxes and needs- tested spending the size of the government expenditure multiplier.

The largest source of government revenues is .

In 2007, Germany increased the value added tax (VAT) on consumption from 16 percent to 19 percent. According to the supply- side view,

Ranked from largest to smallest, the four main sources of federal tax revenue are

Needs- tested spending during recessions and during expansions.

Tax cuts by the federal government to increase long term growth are known as

The Laffer curve shows that increasing increases when low.

During an expansion, tax revenues and government transfer payments .

Automatic stabilizers are not subject to all the same time lags to which discretionary fiscal policy is subject.

How does a tax on labor income affect potential GDP?

-In the above figure, which of the following policies could move the economy to potential GDP?