Exam 13: Fiscal Policy

According to the Laffer Curve, when tax rates are low, there is ________relationship between them and tax revenue.

A fiscal action that is triggered by the state of the economy is called

Each president can decide when to submit a budget to Congress.

If the government raises taxes on labor income and interest income, explain how potential GDP and economic growth are affected.

Between 2000 and 2005, Finland increased its tax on interest income. As a result, the tax wedge ________ and the growth rate of real GDP ________.

-The figure above illustrates the aggregate demand, short-run aggregate supply, and long-run aggregate supply in Lotus Land. The economy is currently at point D and the government decreases its taxes. The economy will move to ________. The price level will ________, and the change in real GDP will be ________ the increase in aggregate demand.

Norway has a lower tax on dividend and interest income than does United Kingdom. We would expect Norway to have a ________ tax wedge and a ________ growth rate of real GDP.

-The table above has data for a country's government budget. The data show the government is running a ________ billion.

If the economy falls into a recession, which of the following responses constitutes the use of automatic fiscal policy?

By definition, a government budget deficit is the situation that occurs when the

The government budget deficit tends to decrease during the expansion phase of a business cycle because tax revenues ________ and government transfer payments ________.

-In the above figure, if actual GDP = $19 trillion, there is a budget ________ equal to ________.

The Laffer curve shows that increasing ________ increases ________ when ________ low.

Comparing the fiscal imbalance for the current generation versus future generations, it is the case that

If the federal government's tax revenues are greater than its outlays, then the federal budget has a

"The federal budget is required by law to balance." Is the previous statement correct or incorrect?

The difference between automatic fiscal policy and discretionary fiscal policy is that

The use of the U.S. federal budget to help stabilize the economy grew in reaction to the ________ and is known as ________.

Automatic fiscal policy occurs

In January 2013 the Social Security payroll tax increased by 2 percentage points. This rise in the Social Security payroll tax ________ the U.S tax wedge.