Exam 16: Fiscal Policy

When tax revenues equal government outlays, the situation is referred to as

The use of the federal budget to achieve macroeconomic objectives of full employment and sustainable economic growth is

Government tax revenues ________ during an expansion and ________ during a recession, which leads to larger budget deficits during the ________ phase of the business cycle.

To eliminate a recessionary gap, the government can ________ government expenditures on goods and services or ________ taxes.

If tax revenue is $230 billion and the government's outlays are $235 billion, then the budget

"The federal budget is required by law to balance." Is the previous statement correct or incorrect?

Suppose the economy is in an equilibrium in which real GDP is less than potential GDP.To increase real GDP, the government can use a fiscal stimulus of

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

Ignoring any supply-side effects, when taxes are hiked, real GDP ________ and the price level ________.

As contrasted to the mainstream view, Keynesian economists believe that ________ than mainstream economists believe.

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

Once supply side effects are taken into account, tax cuts for labor income can change i. the supply of labor Ii) potential GDP. Iii) the growth rate of potential GDP.

Which of the following is a limitation of discretionary fiscal policy? i. law-making lags ii. estimating potential GDP iii. income gap

Which of the following is true?

The figure above shows an economy aggregate demand curve and aggregate supply curves. -Suppose the shift from AD₀ to AD₁ and from AS₀ to AS₁ is the result of fiscal policy.If the effect on aggregate demand was larger than the figure above shows, as a result the price level would be ________ 110 and real GDP would be ________ $14 trillion.

A cut in the income tax rate ________ the tax wedge and ________ employment, saving, and investment.

The supply-side effects of a change in taxes on labor income means that ________ in taxes on labor income shift the ________.

When government outlays exceed tax revenues, does the government have a budget deficit or surplus?

If the income tax rate is 20 percent and the tax rate on consumption expenditure is 15 percent, then the tax wedge is

If a change in the tax laws leads to a $100 billion decrease in tax revenue, then aggregate demand