Exam 13: Fiscal Policy

When real GDP is less than potential GDP, an increase in government expenditures will ________ real GDP and ________ the price level.

Which branches of the government play a role in the enacting of the federal budget? I. the President II. the House of Representatives III. the Senate

The cyclical deficit is the portion of the deficit

The federal government debt is equal to the

The budget process includes the

-In the above figure, if the economy is initially at point D and taxes are cut while potential GDP does not change, then the economy will

Suppose that the tax rate on interest income is 25 percent, the real interest rate is 4 percent, and the inflation rate is 4 percent. In this case, the real after-tax interest rate is equal to

-In the above figure, if the economy initially is at point A and government expenditure increases, in the short run the economy will move to point

Suppose a country has been running a persistent government budget deficit. If the deficit is reduced, but remains positive

Government expenditure on goods and services is the largest component of total federal government expenditures.

Comparing the U.S. budget position for 2017 to the rest of the world, we see that as a percentage of GDP, the ________ than in most other countries.

What is fiscal policy and what are its purposes?

-Does the figure above illustrate a recessionary or an inflationary gap? What do potential GDP and real GDP equal? What is an appropriate fiscal policy to restore real GDP to potential real GDP?

An increase in taxes on labor income shifts the labor supply curve ________ and the ________.

In 2007, Germany increased the value added tax (VAT) on consumption from 16 percent to 19 percent. The supply-side view, this will

The Employment Act of 1946 states that it is the responsibility of the federal government to

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

-In the above figure, if the economy is initially at point B and government expenditure decreases, the economy will

In order for the United States to have a surplus of exports over imports to repay its international debt, the United States would need to

The largest source of government revenues is