Exam 20: Fiscal Policy and Monetary Policy

Which of the following is an example of a fiscal stimulus?

Which of the following is a problem in pursuing monetary policy?

The balanced budget multiplier is

In the United States for the year 2012, the federal government had a ________ so the national debt was ________.

The balanced budget multiplier applies when a $50 billion increase in government expenditure is financed by a $50 billion ________ in tax revenue and the balanced budget multiplier shows that in this case there is ________ effect on aggregate demand.

-The above table gives the government outlays and tax revenues from 2008 through 2012 for two countries. In 2011 country A had a ________ and country B had a ________.

If the government uses fiscal policy to close a recessionary gap, government

The Fed is concerned about inflation. Its policy will ________ U.S. short-term interest rates and, in the foreign exchange market, lead to the value of the U.S. dollar ________.

If government expenditures on goods and services increases by $20 billion, then aggregate demand

When would the Fed want to carry out a monetary policy that decreases aggregate demand?

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

Which of the following statements are correct? I. Congress does not play a role in making monetary policy decisions. Ii. The FOMC meets eight times a year to make monetary policy decisions. Iii. The President of the United States appoints members and the Chairman of the Board of governors but has little other formal authority over monetary policy.

If the Fed lowers the federal funds rate, which of the following occurs?

A fall in the federal funds rate leads to

When tax revenues minus outlays is i. positive, the government has a budget surplus. Ii. negative, the government has a budget deficit. Iii. zero, the government has a balanced budget.

The Fed raises the federal funds rate when it

When the Federal Reserve increases the federal funds rate, bank loans ________, the supply of loanable funds ________, and the real interest rate ________.

Explain how a tax cut effects employment, labor productivity, and potential GDP.

If the Fed raises the federal funds rate

During the late 1960s, real GDP increased, unemployment fell, and the inflation rate started to rise. Which would have been the appropriate federal government policy combination to improve economic performance by lowering the inflation rate?