Exam 13: Fiscal Policy

-The government begins year 1 with $25 billion of debt. Based on the information in the above table, what is the amount of debt following year 2?

Suppose that the government decreases its expenditures on goods and services. Within the AS-AD model, the result will be ________ in real GDP and ________ in the price level.

Which of the following are limitations of fiscal policy? I.There is a lag between recognizing that fiscal policy might be needed and when it actually takes effect. II.Economic forecasts might be incorrect. III.Monetary policy might counter fiscal policy.

Norway has a lower tax on dividend and interest income than does United Kingdom. We would expect Norway to have a ________ tax wedge and a ________ growth rate of real GDP.

The cyclical deficit is the portion of the deficit

A decrease in the income tax rate

Unemployment insurance are payments made to unemployed workers. Typically workers are paid for no more than 26 weeks. In December 2012, the federal government passed legislation that would extend the payments to a maximum of 73 weeks. This extension is an example of

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

-What is the amount of the surplus or deficit incurred in year 1 by the government shown in the above table?

Depending on the relative size of the federal government's outlays and tax receipts, the federal government's budget can be in three possible conditions. What are the three possible conditions and what is the relationship of federal government outlays and tax receipts for each?

An increase in government expenditure shifts the AD curve ________ and an increase in taxes shifts the AD curve ________.

When the economy grows, ________ increase because real GDP ________.

During an expansion, tax revenues ________, while during a recession, tax revenues ________.

If the government runs a surplus, the total amount of government debt is

If employment is less than full employment, what fiscal policy should the government pursue?

The budget process includes the

-In the above figure, if the economy is initially at point B and government expenditure decreases, the economy will

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

A structural deficit occurs when the government budget has a deficit

The structural deficit is the deficit