Exam 18: Fiscal Policy

Consider the following statement,"The Federal Reserve fights recessions by increasing the money supply so people will have more money to spend." What is wrong with the statement and how can it be corrected?

Figure 18-5 -Refer to Figure 18-5.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,and no fiscal or monetary policy is pursued,then at point B

Which of the following would be most likely to induce Congress and the president to conduct expansionary fiscal policy? A significant

Which of the following is the largest category of federal government expenditures?

Which of the following provides health-care coverage to people age 65 and over?

Suppose the government wants to maintain a balanced budget.To achieve this goal,when the economy falls into recession government would need to ________ taxes,which would cause aggregate demand to ________.

Suppose real GDP is $13 trillion and potential real GDP is $13.5 trillion.If Congress and the president increase government purchases by $500 billion,then the economy will be brought to equilibrium at potential real GDP.

The government budget for the country of Economia is in surplus in 2011,and in deficit in the following year,2012.We can conclude the

Identify each of the following as (i)part of an expansionary fiscal policy,(ii)part of a contractionary fiscal policy,or (iii)not part of fiscal policy. a.The personal income tax rate is lowered. b.Congress cuts spending on defense. c.College students are allowed to deduct tuition costs from their federal income taxes. d.The corporate income tax rate is lowered. e.The state of Nevada builds a new tollway in an attempt to expand employment and ease traffic in Las Vegas.

The largest source of federal government revenue in 2012 was

The cyclically adjusted budget deficit or surplus measures what the deficit or surplus would be if the economy was

Figure 18-1 -Refer to Figure 18-1.Suppose the economy is in a recession and expansionary fiscal policy is pursued.Using the static AD-AS model in the figure above,this would be depicted as a movement from

Figure 18-6 -Refer to Figure 18-6.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,and no fiscal or monetary policy is pursued,then at point B

If the federal budget has an actual budget surplus of $75 billion,but a cyclically adjusted budget surplus of $50 billion,then the economy must be above potential real GDP.

A tax rebate,like the one issued in 2008,is likely to ________ consumption spending ________ than would a permanent tax cut.

Which of the following is considered contractionary fiscal policy?

Tax cuts on business income ________ aggregate demand.

In absolute value,the tax multiplier is greater than the government purchases multiplier.

If Congress and the president pursue an expansionary fiscal policy at the same time as the Federal Reserve pursues an expansionary monetary policy,how might the expansionary monetary policy affect the extent of crowding out in the short run?

An increase in government spending will force an appreciation of the dollar,which causes net exports to fall.