Exam 13: Fiscal Policy

In January 2013 the Chinese government held approximately $1 trillion in U.S. government debt. The Chinese government accumulated such a large about of the U.S. government debt because for the past decade, the United States

Personal income taxes are the largest source of revenue for the federal government.

What is automatic fiscal policy? How does it affect the budget deficit and/or budget surplus during a recession and during an expansion?

-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 increases its expenditure on goods and services. The economy will move to ________. The price level will ________, and the change in real GDP will be ________ the increase in aggregate demand.

An increase in government expenditure leads to rightward shift of the AD curve.

The government begins year 1 with $25 billion of debt. Based on the information in the above table, what is the amount of debt following year 2?

-In the above figure, which fiscal policy could help move the economy to potential GDP?

The supply side effects of a change in taxes on labor income means that ________ in taxes on labor income will shift the ________.

Discretionary policy requires an act of Congress.

The system that measures the lifetime tax burden and benefits of each generation is called

The structural deficit is the deficit that occurs when

When the economy grows, ________ increase because real GDP ________.

In 2017, the federal government of Happy Isle had tax revenues of $1 million, and spent $500,000 on transfer payments, $250,000 on goods and services and $300,000 on debt interest. In 2014, the government of Happy Isle had a

Fiscal policy attempts to achieve all of the following objectives EXCEPT

Suppose the only revenue taken in by the government is in the form of income tax, and the tax rate is 10 percent. If aggregate income is $800 billion, and government outlays are $100 billion, then the government budget has

A budget surplus occurs when government

The ________ the interest rate, the ________ the present value of a given future amount.

If the government runs a deficit, the total amount of government debt is

Federal government outlays as a percentage of GDP are approximately

-What is the amount of the surplus or deficit incurred in year 4 by the government shown in the above table?