Exam 10: Fiscal Policy

According to the Laffer curve, higher tax rates will result in lower tax revenues if:

During the Kennedy Era, the highest tax rate for an individual was

Inside lags in fiscal policy tend to take a long time, usually longer than the outside lags.

In fiscal policy, the inside lags can take a long time because:

According to economic studies, the 2001 tax rebates under the presidency of G. W. Bush did not increase aggregate demand because:

Explain why the budget deficit is considered to be an "automatic" economic stabilizer.

The expenditures incurred by the government during the war in Iraq decreased the budget deficit.

A reduction in government expenditure or an increase in taxes is defined as:

The Kennedy administration endorsed substantial tax cuts because:

Explain how changes in government purchases and taxes can affect the level of aggregate demand both directly and indirectly.

The largest source of federal revenue is:

What kind of active fiscal policy was implemented in early 2008 in response to a slowing economy?

An increased federal budget surplus during an expansion serves as an automatic economic stabilizer for all of the following reasons except:

Explain why budget deficits should not be a source of economic concern in the short run but at the same time can harm the economy in the long run.

The George W. Bush administration inherited budget surpluses from the Clinton administration before starting to run large budget deficits itself.

As the Vietnam War began and the economy started to overheat from the large military spending, policymakers:

The smallest category of federal spending is:

When the federal government runs a budget deficit:

The tax surcharge enacted during the early years of the Vietnam War failed to decrease consumer spending because:

Congress increases government spending. This is an example of: