Exam 17: Monetary Policy

Decreasing government spending ________ the price level and ________ equilibrium real GDP,ceteris paribus.

Crowding out results in

Which of the following is a true statement about the multiplier?

If crowding out occurs,an increase in government spending

Economists think that the marginal propensity to consume for the Australian economy is between 0.9 and 0.95.Based on our simple multiplier formula,this would imply that the multiplier for Australia should be at least 10.However,many economists agree that the spending multiplier is closer to 2.0.What might explain this supposed anomaly?

During an economic contraction,why is it likely that the federal government budget will move into deficit?

The federal government debt ________ when the federal government runs a deficit and ________ when the federal government runs a surplus.

The multiplier is calculated as the change in

Figure 17.1 -In Figure 17.1,if fiscal policy successfully moves the economy from point B to equilibrium at potential GDP,this will

If tax reduction and simplification are effective,then

What is the cyclically adjusted budget deficit or surplus?

Explain why the tax multiplier is different from the government purchases multiplier.

Which of the following does not function as an automatic stabiliser?

According to Friedman and Phelps,if actual inflation is greater than expected inflation

Which of the following is a true statement about the multiplier?

What is expansionary fiscal policy and under what circumstances would it be used?

Expansionary fiscal policy is used by the government in an attempt to fight rising inflation.

A cut in tax rates affects equilibrium real GDP through two channels: ________ disposable income and consumer spending,and ________ the size of the multiplier effect.

Government purchases and transfer payments are included in the measure of government expenditure.

During which decade was government expenditure in Australia the highest as a proportion of GDP?