Exam 16: Fiscal Policy

An appropriate fiscal policy response when aggregate demand is growing at a faster rate than aggregate supply is to decrease the money supply.

Which of the following would be classified as fiscal policy?

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,Congress and the president would most likely pursue

A recession tends to cause the federal budget deficit to ________ because tax revenues ________ and government spending on transfer payments ________.

A(n)________ in private expenditures as a result of a(n)________ in government purchases is called crowding out.

Why would a higher tax rate lower the government purchases multiplier? What does the tax rate have to do with the government purchases multiplier?

Which of the following would be most likely to induce Congress and the president to conduct contractionary fiscal policy? A significant

Social Security

Data indicates that recessions following financial crises ________ recessions which do not follow financial crises.

In the long run,most economists agree that a permanent increase in government spending leads to

The impact of crowding out may be the least

A tax rebate by the government would

In an open economy,the government purchases multiplier will be smaller the

Expansionary fiscal policy involves

An equal increase in government purchases and taxes will cause

The Social Security and Medicare programs have been a failure in terms of reducing poverty among elderly U.S.citizens.

Figure 16-1 -Refer to Figure 16-1.An increase in taxes would be depicted as a movement from ________,using the basic AD-AS model in the figure above.

Figure 16-1 -Refer to Figure 16-1.Suppose the economy is in short-run equilibrium above potential GDP and automatic stabilizers move the economy back to long-run equilibrium.Using the basic AD-AS model in the figure above,this would be depicted as a movement from

If the federal budget has an actual budget surplus of $75 billion,but a cyclically adjusted budget surplus of $50 billion,then the economy must be above potential real GDP.

The federal government debt equals