Exam 13: Fiscal Policy

How has the federal government debt as a percentage of GDP changed since the end of World War II?

If the budget deficit is $50 billion and the structural deficit is $10 billion,the cyclical deficit is

If employment exceeds full employment,what fiscal policy actions could eliminate the gap?

Government transfer payments ________ during expansions and ________ during recessions.

The difference between automatic fiscal policy and discretionary fiscal policy is that

The tax rebates passed by Congress in 2008 to help move the economy more rapidly toward potential GDP are an example of

Fiscal policy attempts to achieve all of the following objectives EXCEPT ________.

If we compare the United States to France,we see that potential GDP per person in France is ________ than that in the United States because the French tax wedge is ________ than the U.S.tax wedge.

Suppose the only revenue taken in by the government is in the form of income tax,and the tax rate is 10 percent.If aggregate income is $800 billion,and government outlays are $100 billion then the government budget has

When the economy is hit by spending fluctuations,the government can try to minimize the effects by

-The figure above illustrates the aggregate demand,short-run aggregate supply,and long-run aggregate supply in Lotus Land.The economy is currently at point D and the government decreases its taxes.The economy will move to ________.The price level will ________,and the change in real GDP will be ________ the increase in aggregate demand.

Deliberate changes in government expenditures and taxes to influence GDP are discretionary fiscal policy.

A report on the EU economic stimulus plan suggested that "...Governments must consider ...cutting VAT [value added tax] and labor taxes ..." The VAT is similar to a sales tax.If governments follow the suggestions,there will be ________ according to the supply-side view.

When interest income is taxed and the inflation rate rises,the tax revenue collected by the government

If $1,000 is invested at 3 percent per year for 10 years the investment grows to $1,343.92.This means the present value $1,343.92 at an interest rate of 3 percent 10 years from now is

Which of the following government bodies does NOT participate directly in formulating U.S.fiscal policy?

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

9 Extended Problems Labor (millions of hours per year) Real GDP (millions of 2005 dollars) 200 6,800 240 7,680 280 8,400 320 8,960 360 9,360 -The table above shows the aggregate production function in the economy of Prescottia.The people of Prescottia pay no taxes and are willing to work 248 million hours a year for a real wage rate of $8 an hour,and for each dollar increase in the real wage,they are willing to work 4 million additional hours per year. a) Draw the economy's aggregate production function. Wage rate (dollars per hour) Quantity of labor demanded (millions of hours per year) 24 200 20 240 16 280 12 320 b) Prescottia's demand for labor schedule is in the table above.Draw Prescottia's demand for labor and supply of labor curves. c) What are the economy's full-employment quantity of labor and real wage rate? What is the country's potential GDP? d) Suppose that Prescottia's government introduces a 25 percent income tax.Using your graph,what happens to the demand for labor? What happens to the supply of labor? Explain. e) After the tax is imposed,what happens to Prescottia's full-employment quantity of labor? What happens to Prescottia's potential GDP?

Whenever the federal government spends more than it receives in tax revenue,then by definition it

If the government wants to engage in fiscal policy to increase real GDP,it could