Exam 27: Fiscal Policy

If we include consideration of potential effects of a proposed tax reduction and simplification on the labor supply, we would expect crowding out of investment and net exports brought about by the tax cut to be

Following a decrease in government spending, as the price level falls we would expect the level of interest rates to ________ and investment to ________.

The multiplier effect is the series of ________ increases in ________ expenditures that result from an initial increase in ________ expenditures.