Exam 13: Fiscal Policy

By its very definition, every budget deficit is structural in nature.

An increase in the government __________reduces the governmentʹs __________.

The tax rebates passed by Congress in 2008 to help move the economy more rapidly toward potential GDP are an example of

During an expansion, tax revenues _________, while during a recession, tax revenues_________ .

The Council of Economic Advisers

Year Government tax revenues (billions of dollars) Government expenditures (billions of dollars) 1 240 240 2 250 245 3 260 255 4 300 320 5 325 340 -What is the amount of the surplus or deficit incurred in year 2 by the government shown in the above table?

If real GDP is less than potential GDP, which of the following fiscal policies would increase real GDP?

-In the above figure, if the economy is initially at point B and taxes are raised, if potential GDP does not change then the economy will move to point

An increase in taxes on labor income shifts the labor supply curve leftward and the after -tax wage rate falls.

What is the difference between budget surplus, budget deficit and a balanced budget? Which of these three budget outcomes is currently the case in the United States?

The structural deficit is the deficit

Because of automatic fiscal policy, when real GDP decreases

ʺObama Considers Delaying Tax Increaseʺ ʺU)S. President-elect Barack Obama is considering delaying his proposal to repeal the Bush tax cuts for the wealthiest Americans in light of the economic downturn.ʺ Obamaʹs possible decision to delay the tax increase recognizes the fact that a tax increase will_______disposable income and _________real GDP.

Year Government outlays (trillions of 2005 dollars) Tax rec eipts (trillions of 2005 dollars) 2007 0.75 0.80 2008 0.80 0.83 2009 0.87 0.86 2010 0.95 0.95 2011 1.06 1.02 -The above table gives a countryʹs government outlays and tax receipts for 2007 through 2011. During which years did the country have a balanced budget, budget surplus, and budget deficit?

Which of the following is NOT a revenue source for the Federal government?

In 2007, Denmarkʹs government had expenditures of $157 billion and spending of $171 billion. GDP in 2007 was $312 billion. The government ran a budget and government debt____________

Spending on programs that result in transfer payments that depend on the economic state of individuals and businesses is called_________ .

If we compare the United States to France, the U.S. tax wedge is _________the French tax wedge.

The governmentʹs budget deficit or surplus equals the

Depending on the relative size of the federal governmentʹs outlays and tax receipts, the federal governmentʹs budget can be in three possible conditions. What are the three possible conditions and what is the relationship of federal government outlays and tax receipts for each?