Exam 28: Managing Aggregate Demand: Fiscal Policy

Figure 11-3 -In Figure 11-3, which line represents the change in the consumption schedule caused by a cut in the personal income tax as advocated by President George W.Bush in 2001?

Figure 11-2 -Which graph in Figure 11-2 best reflects a Keynesian's view of the impact of raising taxes on saving?

Figure 11-2 -Which graph in Figure 11-2 best reflects a supply-sider's view of the impact of an increase in the personal income tax rate?

Which of the following will shift the aggregate demand curve outward?

The macroeconomic policy planner's job is made difficult because of

In 2006 and 2007 the U.S.faced an inflationary gap which would suggest the use of restrictive fiscal policy.

How does an increase in taxes affect the expenditure schedule?

Why does the numerical value of the multiplier fall when an income tax is added to the income-expenditure model?

Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.

Liberals tend to favor increasing taxes as the method of counteracting inflation.

Most of the taxes collected by governments tend to

Figure 11-2 -Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?

When the government taxes and spends, each activity affects GDP in the same proportion.

How do transfer payments function as negative taxes?

Define the following terms and explain their significance to the study of macroeconomics: a.fiscal policy b.transfer payments c.effect of income taxes on the multiplier d.supply-side tax cuts

In an effort to balance the budget, the government cuts spending rather than increasing taxes.What will happen to the consumption schedule?

During the debate on the stimulus package in 2009 and 2010, Republicans argued in favor of increased government spending as opposed to tax cuts based in part on the impact government spending would have on aggregate supply.

When income taxes are included in the basic macroeconomic model, the value of the

A "liberal" would most likely argue in favor of

When policy makers choose between tax policy and spending policy to affect the level of aggregate demand, they tend to choose on the basis of