Exam 18: Fiscal Policy

The increase in government spending on unemployment insurance payments to workers who lose their jobs during a recession and the decrease in government spending on unemployment insurance payments to workers during an expansion is an example of

________ and ________ are the largest sources of revenue collected by the federal government.

How could the existence of an unemployment insurance system or other transfer programs have reduced the severity of the Great Depression?

Figure 18-2 -Refer to Figure 18-2.In the graph above,if the economy is at point A,an appropriate fiscal policy by Congress and the president would be to

Explain how a tax reduction on capital gains and dividends might increase aggregate supply.

List the five categories of federal government expenditures.

Tax increases on business income decrease aggregate demand by decreasing

Show the impact of tax reduction and simplification using the dynamic aggregate demand and aggregate supply model.Clearly show and identify the impact of the tax change.Assume that aggregate demand and short-run aggregate supply shift as they typically do in the dynamic model.Show what happens to the price level and real GDP because of the tax change.

The tax multiplier is calculated as "one minus the government purchases multiplier."

Figure 18-4 -Refer to Figure 18-4.In the graph above,suppose the economy is initially at point A.The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by Congress and the president?

Which of the following is a reason why we should consider the federal national debt a problem?

When President Obama took office in January 2009,he pledged to pursue an expansionary fiscal policy to try to pull the economy out of the recession.The next month,Congress passed the American Recovery and Reinvestment Act of 2009,a $840 billion package of ________ that was the largest fiscal policy action in U.S.history.

A one-time tax rebate,which is not expected to be extended in future years,will

During the Great Depression,what appeared to be ________ fiscal policy was actually not when the ________ budget deficit or surplus is examined.

A decrease in which of the following would decrease the tax wedge?

In November 2017, the House Ways and Means Committee announced a tax reform bill which includes hundreds of changes to the tax code. Overall, the tax plan represents a move in the direction of greater neutrality and global competitiveness. Following are eight of the most important provisions in the tax bill. 1. The corporate tax rate would be reduced to 20 percent. 2. Pass-through business income would be taxed at a maximum rate of 25 percent. 3. Some disincentives to investment would be rolled back. 4. The country would move to a territorial tax system. 5. Many itemized deductions would be eliminated. 6. The estate tax would be repealed. 7. The tax treatment of interest would change. 8. Tax expenditures would be curtailed. Source: Jared Walczak and Amir El-Sibaie, "Eight Important Changes in the Tax Cuts and Jobs Act," taxfoundation.org, November 2, 2017. -Refer to the Article Summary.A reduction in the tax rate on pass-through business income to a maximum of 25 percent would ________ the return to entrepreneurship,and this would ________ aggregate supply.

If Congress and the president pursue an expansionary fiscal policy at the same time as the Federal Reserve pursues an expansionary monetary policy,how might the expansionary monetary policy affect the extent of crowding out in the short run?

The growth rate of hours worked depends on all of the following except

If tax reduction and simplification are effective,then

Which of the following would not be considered an automatic stabilizer?