Exam 11: Fiscal Policy and the Federal Budget

In 2011,the top 25 percent of income earners in the U.S.(by the size of their taxable incomes)paid about __________ percent of the total federal income taxes.

Suppose the government increases spending on public education by $700 million and individual spending on private education drops by $500 million.This is an example of

Suppose aggregate demand is too low to bring about the Natural Real GDP level.A Keynesian policy prescription would call for a(n)_____________________ to close this recessionary gap.

The economy is in a recessionary gap,there is incomplete crowding out,and government implements expansionary fiscal policy.It follows that

The period that elapses between the passage of legislation reducing taxes and the time the tax cut is put into effect is called the __________ lag.

A "flat tax" is another term for a regressive tax.

According to the textbook,in 2011 the top 1 percent of income earners in the U.S.earned more than $388,905.

Fiscal policy is implemented primarily by

Suppose the economy is at a position below its institutional production possibilities frontier.To improve this situation,Keynesian economists might propose that government __________ taxes,which will cause the aggregate demand curve to shift to the __________ and Real GDP will __________.

The Laffer curve shows the exclusively direct relationship that exists between tax rates and tax revenues.

The transmission lag is the period that elapses between the time fiscal policy is enacted and the time it is put into effect.

Suppose the economy is at a point below its institutional production possibilities frontier.To improve this situation,Keynesian economists might propose that the government should __________ expenditures,which will cause the aggregate demand curve to shift to the __________ in an attempt to close this __________ gap.

The federal budget is balanced and the economy is on the upward-sloping portion of the Laffer curve.Then,tax rates are cut and government purchases are increased.Is a budget deficit inevitable?

Which of the following statements is true?

To eliminate an inflationary gap,Keynesian theory indicates that government should

Explain how a value-added tax (VAT)works and how it differs from a sales tax.What impact does a VAT have on government revenue and the price of products paid by consumers?

The unique feature of a progressive income tax is that the higher one's income (up to some point),the __________ one pays.

​Exhibit 11-6 -Refer to Exhibit 11-6.The economy is currently in short-run equilibrium producing Q₁.In this situation,Keynesian economists would most likely propose

Which piece of evidence is consistent with zero crowding out?

A structural deficit refers to that part of the deficit that exists as a result of a downturn in economic activity.