Exam 13: Fiscal Policy and the Federal Budget

If a law is passed that forces the federal government to balance its budget annually, then it will require the government to increase expenditures and/or decrease taxes during a recession, thus making the recession worse.

The automatic fiscal stabilizers include all of the following except

All of the following are major goals of fiscal policy except

The Works Project Administration (WPA) is an example of a federal policy aimed at reducing the national debt.

An appropriate fiscal policy for a recession is an increase in government expenditures, an increase in transfer payments, and a decrease in taxes.

To combat inflation, fiscal policy should move toward a

If the aggregate supply curve is horizontal, an expansionary fiscal policy will increase real output by less than if the aggregate supply curve is upward sloping.

Assume that the economy's marginal propensity to consume is 0.9 and the price level is constant. If the U.S. government purchases $10 billion of jet aircraft from American companies, aggregate demand will increase by

If the aggregate supply curve is upward sloping, the cost of using a contractionary fiscal policy to combat inflation will be

The most important automatic stabilizer is the tax system.

In the year 2006, government debt was about what percentage of GDP in the United States?

When there is open international investment, an expansionary fiscal policy in the U.S. will

The impact of an expansionary fiscal policy on real output will be greatest when the aggregate supply curve is

Critics fear that the U.S. government's debt will have an adverse impact on the nation's saving, investment, and stock of capital goods.

The lag between the time that a recession is recognized and the time an expansionary fiscal policy is enacted is the

The Laffer curve shows the relationship between the income tax rate that a government imposes and the total tax revenue that the government collects.

If the government spends more on national defense and as a result, Marcy spends less on the construction of a new house, this is an example of

Assume that the aggregate supply curve is upward sloping. An expansionary fiscal policy that causes only the aggregate demand curve to increase will

To combat a recession, fiscal policy would increase government expenditures and/or decrease taxes, thus causing an increase in aggregate demand.

To combat a recession, the correct fiscal policy would be a