Exam 12: Fiscal Policy

Once either expansionary or contractionary fiscal policy has been undertaken,

Which of the following is NOT a fiscal policy action?

According to the traditional Keynesian approach, if the government increases spending by $5 million and raises current taxes by $5 million at the same time, then

Which of the following fiscal policy actions would definitely cause a reduction in the size of an inflationary gap?

All of the following are automatic stabilizers EXCEPT

A recession begins in July but government policy makers do not reach a consensus that a recession had in fact begun until October. This is an example of a(n)

An example of an automatic stabilizer is

The traditional Keynesian approach to fiscal policy assumes that

If the federal government borrows from the private sector to pay for increased budget deficits and interest rates increase, this will cause

The period between the recognition of a problem and the implementation of a policy to solve the problem is

What is supply-side economics?

When the current short-run equilibrium is to the right of the long-run aggregate supply, appropriate discretionary fiscal policy used to address this problem would be to

According to traditional Keynesian analysis, fiscal policy operates by

Which one of the following is TRUE about the effects of fiscal policy?

To the extent that the Ricardian equivalence theorem is true, which of the conditions below will hold?

Explain how indirect crowding out can offset expansionary fiscal policy.

-Refer to the above figure. If the economy is currently at point C, then an increase in taxes will lead to

According to the Laffer curve, increases in the tax rate will lead to a(n)

-Consider the above figure. The curve shown is sometimes referred to as

During normal times, discretionary fiscal policy