Exam 13: Fiscal Policy

How can discretionary fiscal policy be used to close a recessionary gap?

Between 2000 and 2005, Finland increased its tax on interest income. As a result, the supply curve for loanable funds shifted ________ and the tax wedge ________.

Taking account of the supply-side effects, a tax cut on labor income ________ employment and ________ potential GDP.

Fiscal policy includes

The Employment Act of 1946 made it the responsibility of the federal government to

"More than 9,000 laid-off Nevada workers will qualify for a second 13-week round of extended unemployment benefits, under federal legislation signed by President Bush. [The] workers exhausted their first 13 weeks of extended benefits and will now be eligible for the new benefits, which pay an average of $293 a week." Www)mercurynews.com 11/24/2008 Unemployment benefits are considered part of ________ fiscal policy. The extension of benefits would ________ fiscal policy.

Deliberate changes in government expenditures and taxes to influence GDP are discretionary fiscal policy.

In January 2013 certain tax rates increased, which were predicted to increase the federal government's tax revenue. An increase in tax revenue ________ the government's budget deficit and over time thereby ________ the amount of government debt.

-What is the amount of the surplus or deficit incurred in year 2 by the government shown in the above table?

What is automatic fiscal policy? How does it affect the budget deficit and/or budget surplus during a recession and during an expansion?

Which of the following policies shifts the AD curve the farthest leftward?

The use of the U.S. federal budget to help stabilize the economy grew in reaction to the ________ and is known as ________.

A fiscal action that is triggered by the state of the economy is called

The structural surplus measures whether a budget surplus is cyclical or structural.

How does a tax on labor income affect potential GDP?

An increase in taxes on labor income shifts the labor supply curve ________ and the ________.

Suppose that real GDP equals potential GDP, but the government believes that the economy is in a below full-employment equilibrium. As a result, the government increases its expenditure on goods and services. In response to the government's fiscal policy

On January 1, 2013 the income tax rate for single taxpayers making more than $400,000 per year increased from 35 percent to 39.6 percent. This tax rise has ________ potential GDP.

-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 1?

Federal government outlays as a percentage of GDP are approximately