Exam 13: Fiscal Policy

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

At the start of 2013, the U.S. government predicted that economic growth would rise by 2016 and that the government's deficit would also increase. The government therefore was predicting that in 2016 the cyclical deficit would ________ and the structural deficit would ________.

Using fiscal policy, to increase real GDP and employment the government could ________ government expenditure on goods and services or ________ taxes.

What is the largest source of revenue for the federal government?

Suppose that 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 equal to

If employment is less than full employment, what fiscal policy should the government pursue?

An example of a discretionary fiscal policy is when

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

If the government's budget is in surplus even when the economy is at full employment, the surplus is said to be

A fall in income that results in a decrease in tax revenues is an example of

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

"European Economic Recovery Plan" "The European Commission urged EU governments to jointly combat the economic slowdown with 200 billion euros ($256 billion) in spending and tax cuts to boost growth and consumer and business confidence." The plan "...would see the 27 EU governments spend 1.5 percent of the bloc's gross domestic product to halt the slowdown that has already pushed some European nations into recession." www.iht.com, 11/26/2008 Which of the following describe the EU's plan? i. It is discretionary fiscal policy iI. It will generate a cyclical surplus.

A new 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 figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $18 trillion. If real GDP is $18 trillion, then the government has a

Deliberate changes in government expenditures and taxes to influence GDP are discretionary fiscal policy.

The use of discretionary fiscal policy to end a recession is limited because

-What is the amount of the surplus or deficit incurred in year 5 by the government shown in the above table?

During an expansion, tax revenues ________, while during a recession, tax revenues ________.

One characteristic of automatic fiscal policy is that it

When tax revenues exceed outlays, the government has a ________, and when outlays exceed tax revenues, the government has a ________.