Exam 13: Fiscal Policy

In 2007, Franceʹs government had revenue of $1.287 trillion while expenditures totalled $1.356 trillion. GDP was $2.56 trillion. In 2007, the government budget____________ balance was and government debt____________ .

The Employment Act of 1946 states that it is the responsibility of the federal government to

Between 2000 and 2005, Finland increased its tax on interest income. As a result, the supply curve for loanable funds shifted ____________and the tax wedge____________ .

The use of fiscal policy is limited because

A country has been in existence for only two years. In the first year, tax revenues were $1.0 million and outlays were $1.5 million. In the second year, tax revenues were $1.5 million and outlays were $2)0 million. At the end of the second year, the total government debt was__________ .

The cyclical deficit is the portion of the deficit

An example of a discretionary fiscal policy is when

The Council of Economic Advisors advises the

In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply-side view, as a result of this act the incentive to work ____________and the tax wedge____________ .

The structural deficit or surplus is the

Suppose the tax rate on interest income is 50 percent, the real interest rate is 3 percent, and the inflation rate is 4 percent. In this case, the real after -tax interest rate is

-Does the figure above illustrate a recessionary or an inflationary gap? What do potential GDP and real GDP equal? What is an appropriate fiscal policy to restore real GDP to potential real GDP?

Government expenditure on goods and services is the largest component of total federal government expenditures.

Government transfer payments _________during expansions and _________during recessions.

Suppose the tax rate on interest income is 25 percent, the real interest rate is 4 percent, and the inflation rate is 4 percent. In this case, the real after -tax interest rate is

The present value of the governmentʹs commitments to pay benefits minus the present value of its tax revenues is called

The Laffer curve is the relationship between

The largest source of government revenues is __________-.

An income tax _________potential GDP by shifting the_________ curve_________ .

Whenever the federal government spends more than it receives in tax revenue, then by definition it