Exam 29: Fiscal Policy

The government is proposing to increase the tax rate on labour income and asks you to report on the supply-side effects of such an action. According to the research of Edward C. Prescott, cross-country evidence for Canada, the United States, the United Kingdom, and France shows all of the following except

Currently the government of Ricardia has outlays equal to $100 billion, and a tax scheme that is related positively to real GDP by the following equation: Taxes = $25 billion + 0.1(real GDP). What are autonomous taxes in Ricardia?

An increase in the tax on capital income ________ the supply of loanable funds and ________ investment.

Expenditure on alternative energy and the nation's infrastructure ________ short-run aggregate supply and ________ potential GDP.

What are the main categories of the federal government outlays?

A tax on interest income

A tax on labour income

If the economy is in a recession and the federal government is running a deficit, then an expansion would

As a percentage of provincial GDP, provincial government outlays are highest in

Canada's government debt

Use the figure below to answer the following questions. Figure 29.3.1 -Refer to Figure 29.3.1, which shows the outlays and revenues for the government of Pianoland. A discretionary fiscal restraint policy would be shown as

Use the figure below to answer the following questions. Figure 29.3.1 -Refer to Figure 29.3.1, which shows the outlays and revenues for the government of Pianoland. If real GDP equals $550 billion, the structural deficit is

The category of federal government revenues that fluctuates the most is

Suppose the government starts with a debt of $0. Then in year 1, there is a deficit of $100 billion, in year 2 there is a deficit of $60 billion, in year 3 there is a surplus of $40 billion, and in year 4 there is a deficit of $20 billion. What is government debt at the end of year 4?

If we compare Canada to France and the United Kingdom, Canada's tax wedge is ________ the French tax wedge and ________ the U.K. tax wedge.

Consider all the effects of fiscal policy. An income tax cut

At the end of 2011, the government of China's debt was ¥4,700 billion. (¥ is yuan, the currency of China). In 2012, the government spent ¥6,000 billion and ended the year with a debt of ¥5,300 billion. How much did the government receive in tax revenue in 2012?

Suppose the tax rate on interest income is 25 percent, the real interest rate is 4 percent, and the inflation rate is 4 percent. The real after-tax interest rate is

Use the figure below to answer the following questions. Figure 29.3.1 -Refer to Figure 29.3.1, which shows the outlays and revenues for the government of Pianoland. Automatic fiscal policy would be shown as a movement

Use the figure below to answer the following questions. Figure 29.3.1 -Refer to Figure 29.3.1, which shows the outlays and revenues for the government of Pianoland. An automatic increase in tax revenues would be shown as a