Exam 16: Fiscal Policy

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

The tax multiplier equals the change in ________ divided by the change in ________.

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

Figure 16-5 -Refer to Figure 16-5.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,and no fiscal or monetary policy is pursued,then at point B

Some economists argue that the federal government should normally run a deficit at potential GDP,with the borrowed funds applied to

Suppose that Congress allocates $1 billion to clean up after hurricanes in 2018.It also raises taxes by $1 billion to keep the deficit from growing.If the marginal propensity to consume is 0.9,what is the effect on equilibrium GDP?

From an initial long-run equilibrium,if aggregate demand grows more slowly than long-run and short-run aggregate supply,then Congress and the president would most likely

From the 1960s to 2016,transfer payments

The problem causing most recessions is too little

The Congressional Budget Office estimates the size of the tax multiplier to be ________ for a 2-year tax cut for lower- and middle-income people.

An economic expansion tends to cause the federal budget deficit to ________ because tax revenues ________ and government spending on transfer payments ________.

In an open economy,the government purchases multiplier will be

How can tax simplification be beneficial to the economy?

An increase in government purchases of $200 billion will shift the aggregate demand curve to the right by

The tax multiplier

Calculate the value of the government purchases multiplier if the marginal propensity to consume equals 0.9,the tax rate equals 0.25,and the marginal propensity to import equals 0.15.

Consider the following statement,"The Federal Reserve fights recessions by increasing the money supply so people will have more money to spend." What is wrong with the statement and how can it be corrected?

Figure 16-9 -Refer to Figure 16-9.Given that the economy has moved from point A to point B in the graph above,which of the following would be the appropriate fiscal policy to achieve potential GDP?

The government purchases multiplier equals the change in ________ divided by the change in ________.

During the twentieth century,the largest budget deficits as a percentage of GDP occurred