Exam 13: B: Fiscal Policy, Deficits, Surpluses, and Debt

One reason the public debt will not bankrupt the Federal government is that the:

Refer to the above diagram where T is tax revenues and G is government expenditures.All figures are in billions of dollars.If the full-employment GDP is $400 billion while the actual GDP is $200 billion, the full-employment or cyclically adjusted deficit is:

Refer to the above data.If a 10 percent proportional tax on income is imposed, the consumption schedule will now be:

Who among the following owned the smallest percentage of Canada's public debt in 2016, using Figure 13-7?

Refer to the above diagram.Which tax system has the least built-in stability?

As a percent of GDP, Canada's public debt is:

Refer to the above data.If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the marginal propensity to consume is:

An increase in taxes would be an expansionary fiscal policy.

The greater the progressiveness of the tax system, the less is the built-in stability of the economy.

Other things equal, the stock of capital inherited by future generations is likely to be smaller when government spending:

Refer to the above diagram where T is tax revenues and G is government expenditures.All figures are in billions of dollars.If the full-employment GDP is $400 billion while the actual GDP is $200 billion, the actual budget deficit is:

With a regressive tax system, as the level of income increases in an economy, the average tax rate will:

Refer to the above graph.If interest rates increased by 2 percentage points, what event would most likely counteract the crowding-out effect?

The net export effect may partially counteract an expansionary fiscal policy.

If fiscal policy leads to higher interest rates, the dollar may appreciate and net exports fall.

An appropriate fiscal policy for severe demand-pull inflation is:

If government increases the size of its full-employment surplus, we can:

The "crowding out" effect suggests that:

(1) The composite index of leading indicators turns downward for three consecutive months; (2) Economists reach agreement that the economy is moving into a recession; (3) A tax cut is proposed in Parliament; (4) The tax cut is passed by Parliament; (5) Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover.Refer to the above information.The recognition lag of fiscal policy is reflected in events:

A major reason that a public debt cannot bankrupt the Federal government is because: