Exam 16: Fiscal Policy

"As long as supply-side effects are ignored, the balanced budget multiplier is equal to zero." Is the previous statement correct or incorrect? Define the balanced budget multiplier and then explain your answer.

A decrease in taxes should be applied in a situation with

The tax multiplier is the

Fiscal policies that move the economy toward potential GDP without a change in policy are called

When the government's outlays equal its tax revenue, then the budget

A $100 million decrease in government expenditure on goods and services leads to an even larger decrease in aggregate demand because of

When tax revenue ________ outlays is negative, then the government has a budget ________.

How could an expansionary fiscal policy increase real GDP and lower the price level?

National debt decreases in a given year when a country has

The national debt is

Increasing the income tax rate ________ the ________.

The magnitude of the tax multiplier is smaller than the magnitude of the government expenditure multiplier because

Explain how tax revenue can be both an automatic fiscal policy and a discretionary fiscal policy.

The government expenditure multiplier and the tax multiplier are

If the government reduces expenditure on goods and services by $30 billion, then aggregate demand

The federal budget

Taxes that change with the level of real GDP and income are called

Needs-tested spending

An increase in income taxes ________ employment and ________ potential GDP.

The government collects tax revenue of $100 million and has $105 million in outlays.The budget balance is a