Exam 13: Fiscal Policy and the Federal Budget

Suppose the economy is in a recession and that the marginal propensity to consume is 0.75. Assuming that the price level is constant, by how much would the government have to increase its expenditures in order to increase real output by $200 billion?

According to supply-side economists, the U.S. tax system tends to

The Comprehensive Employment and Training Act provided public service jobs for unemployed workers and young people in the

Figure 13.1 Aggregate Supply and Aggregate Demand -Refer to Figure 13.1. A correct discretionary fiscal policy to enact when the economy is experiencing inflation is to

Which of the following is not true for the crowding-out effect?

Figure 13.1 Aggregate Supply and Aggregate Demand -Refer to Figure 13.1 The goal of a supply-side tax cut is to shift

Figure 13.1 Aggregate Supply and Aggregate Demand -Refer to Figure 13.1. A supply-side tax cut will be inflationary if when taxes decrease,

When government spending exceeds tax revenues during a given year, a budget deficit occurs, which the government finances by issuing securities such as Treasury bills, notes, and bonds.

Economic theory suggests that a decrease in marginal tax rates will encourage individuals to substitute leisure for work and consumption for saving.

Economists generally agree that the expanding economy of the early 200's can be attibuted to what economic policies?

According to supply-side economists, a policy that ______ will cause productivity to increase, which shifts the aggregate supply curve to the right.

To combat demand-pull inflation, fiscal policy would cut government expenditures and/or raise taxes, which causes the government's budget to move into a deficit.

Among the problems facing fiscal policy are timing lags, irreversibility, deflationary bias, and the crowding-out effect.

A primary cost of a large amount of federal debt is the

If the federal government implements public-works projects to combat downturns in the economy, this would be an example of

The ratio of U.S. federal debt to GDP is

The basic elements of fiscal policy were developed by

The cumulative amount of outstanding government borrowing from the public is called

A contractionary fiscal policy would most likely be adopted whne the economiy is experiencing high inflation.

When in the Clinton years unemployment insurance was shortened to under 6 months