Exam 13: Fiscal Policy

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

Using the AD-AS model, an increase in government expenditure

The structural surplus measures whether a budget surplus is cyclical or structural.

When the economy grows,_________ increase because real GDP _________.

-In the above figure, if the economy is initially at point B and government expenditure decreases, the economy will

A reason the government expenditure multiplier is larger than 1 is because

Federal government outlays as a percentage of GDP are approximately

An increase in government expenditure leads to rightward shift of the AD curve.

ʺMore than 9,000 laid-off Nevada workers will qualify for a second 13-week round of extended unemployment benefits, under federal legislation signed by President Bush. [The] workers exhausted their first 13 weeks of extended benefits and will now be eligible for the new benefits, which pay an average of $293 a week. Unemployment benefits are considered part of ____________fiscal policy. The extension of benefits would ____________fiscal policy.

Which branches of the government play a role in the enacting the federal budget? I. the President. II. the House of Representatives. III. the Senate.

Suppose the economy is at a short-run equilibrium with real GDP reater than potential GDP . Which of the following fiscal policies would decrease real GDP and the price level?

In response to the economic crisis in 2008, President Merkel ʺhighlighted in her speech what the German government has already done: a financial sector rescue package worth up to €500 billion, and a proposed stimulus package of tax breaks [on income] and spending measures aimed at triggering investments of up to €50 billion over the next two years. Which parts of the stimulus plan will increase labor supply?

An increase in the tax on interest income_________ the supply of loanable funds and _________the equilibrium investment.

-In the above figure, if the economy is initially at point D and government expenditure increases, the economy will move to point

Which of the following is the largest source of federal government revenue?

If we compare the United States to France, we see that potential GDP per person in France is_________ than that_________ in the United States because the French tax wedge is than the U.S. tax wedge.

According to the Laffer curve, raising the tax rate

Deliberate changes in government expenditures and taxes to influence GDP

In 2007, Norwayʹs government had revenue of $226.3 billion and expenditures of $158.7 billion. At the same time, GDP totalled $392 billion and government debt was about 67 percent of GDP. In 2007, Norwayʹs government ran a government budget____________ and government debt ____________.

The difference between the before-tax and after-tax rates is referred to as the