Exam 13: Fiscal Policy

An example of automatic fiscal policy is when

An increase in the tax on interest income ________ the supply of loanable funds and ________ the equilibrium investment.

In 2008, Britain decided to cut its value added tax (VAT)to 15 percent from 17.5 percent. The VAT is similar to a sales tax. According to the supply-side view, this change will increase I.the after-tax wage. II.the incentive to work. III.the supply of labor.

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

The Employment Act of 1946 states that it is the responsibility of the federal government to

According to tax receipt and outlay categories, what are the main components of the federal government budget?

-Economic data for a mythical economy in the years 2012-2016 are summarized in the figure above. Assume that the spending formulas and tax schedules are identical for all years. When the economy is at full employment, the government has a

What is the effect on aggregate demand and the AD curve from either an increase in government expenditure or a cut in taxes?

Prior to the Great Depression, the purpose of the federal budget was to ________.

The actual budget deficit is equal to the

A country has been in existence for only two years. In the first year, tax revenues were $1.0 million and outlays were $1.5 million. In the second year, tax revenues were $1.5 million and outlays were $2.0 million. At the end of the second year, the total government debt was ________.

-In the above figure, if the economy is initially at point D and taxes are cut while potential GDP does not change, then the economy will

To eliminate the fiscal imbalance the government could

Which branches of the government play a role in the enacting of the federal budget? I.the President. II.the House of Representatives. III.the Senate.

-The above table gives a country's government outlays and tax receipts for 2011 through 2015. During which years did the country have a balanced budget, budget surplus, and budget deficit?

Suppose that the tax rate on interest income is 25 percent, the real interest rate is 4 percent, and the inflation rate is 4 percent. In this case, the real after-tax interest rate is equal to

If real GDP is less than potential GDP, which of the following fiscal policies would increase real GDP?

Which of the following relationships is CORRECT?

-Does the figure above illustrate a recessionary or an inflationary gap? What do potential GDP and real GDP equal? What is an appropriate fiscal policy to restore real GDP to potential real GDP?

Automatic fiscal policy is not subject to all the same time lags to which discretionary fiscal policy is subject.