Exam 12: Fiscal Policy: Incentives, and Secondary Effects

Critics of the Keynesian view argue that increases in government spending financed by borrowing will hamper the recovery from a recession and  slow long term growth because

Diego's annual income increased from $20,000 to $25,000. If Diego faces a 40 percent effective marginal tax rate, the $5,000 increase in income will expand his disposable income by

How will an increase in government expenditures during a recession be reflected in GDP?

The new classical model states that a

According to the new classical view, budget deficits will

If heavy federal borrowing pushes up real interest rates in the United States, which of the following will most likely result?

During 2001-2012, the federal budget deficit

Which of the following contributed to the weak recovery from the 2008-2009 recession?

The modern synthesis view of fiscal policy stresses

Why might an expansion in government spending increase the severity of the coordination problem during a recession?

If a fiscal policy change is going to exert a stabilizing impact on the economy, it must

In a world where capital moves rapidly across national boundaries, if a larger budget deficit leads to higher real interest rates,

Keynesians and non-Keynesians would largely agree on which one of the following statements?

According to the crowding-out effect, expansionary fiscal policy will lead to

Which of the following would be most likely to maintain that spending increases and larger budget deficits would help promote recovery from the recession of 2008-2009?

Which of the following attributes of fiscal policy will most likely be stressed by a proponent of supply-side economics?

According to the new classical theory, a $50 billion increase in government expenditures financed by a $50 billion increase in the budget deficit will

Which of the following about fiscal policy is true?

What is supply-side economics, and how does it differ from the Keynesian emphasis on fiscal policy?

When household debt as a share of income is abnormally high,