Exam 15: Fiscal Policy

The delay between the recognition that the economy is in a recession and the implementation of a policy response is known as the _____ lag.

Supply-side fiscal policies focus on increasing output and decreasing inflation rate by _____ supply.

Which of the following economists is one of the founders of monetarist theory?

_____ fiscal policy shifts the aggregate demand curve left and therefore can be used to close _____ gap.

If government spending is less than the tax revenue, then the government has a budget _____. In this case, the overall debt of the government will:

Which one of the following statements is NOT true?

The expenditures of the U.S. federal government that are required by law are known as _____ spending.

The government's influence over the economy via taxes and expenditure is known as _____ policy.

A tax system in which low-income people pay a higher proportion of their income in taxes than high-income people is known as _____ tax system.

If there is an inflationary gap in the economy, then it is producing _____ than its full employment level of output, and the government can _____ spending to close the gap.

If government spending is greater than the tax revenue, then the government has a budget _____. In this case, the overall debt of the government will:

Use Figure: Fiscal Policy II. If the economy is operating at point A, then there is _____ gap, and the government can _____ spending to close this gap. ​ Fiscal Policy II

Suppose that the total debt of the U.S. federal government at the end of 2017 was $19 trillion. In 2018, the government spends $3.2 trillion and collects $2.2 trillion in taxes. What will be the total debt at the end of 2018?

The inverted U-shaped relationship between tax rates and tax revenue is known as the _____ curve.

Which of the following statements is true?

_____ lag refers to the delay that occurs between when a recession begins and when the government recognizes it, and _____ lag refers to the delay between the policy change in response and the resulting effect.

Because individuals are incentivized to work _____ when tax rates decrease, the Laffer curve suggests that _____ tax rates when they are very high can increase the tax revenue.

If the full employment level of output for an economy is 1,000 units and it is currently producing 1,100 units, then there is _____ gap, and the government can _____ transfer payments to close the gap.

If there is a recessionary gap in the economy, then it is producing _____ than its full employment level of output, and the government can _____ spending to close the gap.

An increase in the government spending that is financed though borrowing _____ the interest rate, which can lead to ______ in private investment.