Exam 12: Fiscal Policy: Incentives, and Secondary Effects

What is the most appropriate test to evaluate whether a government-spending program will improve living standards and lead to higher income levels?

According to the Keynesian view, government spending will have its greatest impact during a severe recession because

When the government funds a project that will create jobs, the funds for the project

If the government cuts the tax rate, workers get to keep

Measured as a share of GDP, federal spending during 2001-2010

Which of the following is most important for long-run growth and a healthy economy?

The expansionary effects of an increase in government expenditures will tend to be offset, at least partially, if

Which of the following will reduce the negative impact the debt to GDP ratio will have on the U.S. economy?

Which of the following will make it more difficult for the United States to control the growth of the federal debt in the decade ahead?

Shaniqua sells life insurance and is considering buying a $60,000 Lexus for business purposes (thus, the expense reduces her taxable income). If Shaniqua is in the 40 percent marginal tax bracket, how much after-tax income will she have to give up in order to enjoy the Lexus?

According to new classical economists, the most appropriate policy during a recession would be for the government to

Historically, Keynesian economists have argued that government spending will stimulate aggregate demand more than tax cuts because

The crowding-out effect stresses that

Use the figure below to answer the following question(s). Figure 12-3 Refer to Figure 12-3. If an economy is currently operating at Y₁, which of the following would a new classical economist be most likely to favor?

Raising taxes as an element of discretionary fiscal policy is intended to reduce aggregate demand, but it can also reduce aggregate supply if

Supply-side economics concentrates on the benefits of reducing marginal tax rates. Describe three ways that high marginal tax rates are likely to retard output growth.

Measured as a share of GDP, the net federal debt

If a budget surplus leads to a decrease in U.S. real interest rates, the lower rates will tend to cause

Public choice analysis indicates that elected political officials will find debt financing

In response to the recession of 2008-2009, the United States