Exam 27: Fiscal Policy

Part of the spending on the Caldecott Tunnel project in northern California came from the American Reinvestment and Recovery Act,which is an example of ________ aimed at increasing real GDP and employment.

Historically,the largest U.S.federal budget deficits as a percentage of GDP in the 20th century occurred during

Lowering the individual income tax will increase household disposable income and consumption spending.

Assuming a fixed amount of taxes and a closed economy,calculate the value of the government purchases multiplier,the tax multiplier,and the balanced budget multiplier if the marginal propensity to consume equals 0.5.

The budget deficit increases during wars and recessions.

In a closed economy with fixed or autonomous (non-income dependent)taxes,the balanced budget government purchases multiplier is negative.

The government purchases multiplier equals the change in ________ divided by the change in ________.

In preparing their estimates of the stimulus package's effect on GDP,Obama administration economists estimated a government purchases multiplier of 1.57.This indicates that a $1 billion increase in government purchases would increase equilibrium real GDP by

Figure 27-1 -Refer to Figure 27-1.Suppose the economy is in short-run equilibrium above potential GDP and no policy is pursued.Using the static AD-AS model in the figure above,this would be depicted as a movement from A) D to C. B) A to E. C) C to D. D) C to B. E) E to A.

Fiscal policy is determined by

Which of the following is an objective of fiscal policy?

Which of the following provides health-care coverage to people age 65 and over?

In an open economy,the government purchases multiplier will be smaller the

Federal government expenditures,as a percentage of GDP,

When President Obama took office in January 2009,he pledged to pursue an expansionary fiscal policy to try to pull the economy out of the recession.The next month,Congress passed the American Recovery and Reinvestment Act of 2009,a $787 billion package of spending increases and tax cuts that was

If real equilibrium GDP is above potential GDP,expansionary fiscal policy should be pursued.

What is expansionary fiscal policy? What is contractionary fiscal policy?

Suppose that Congress allocates $5 billion to an "energy-efficient appliance rebate" program.It also raises taxes by $5 billion to keep the deficit from growing.If the marginal propensity to consume is 0.8,what is the effect on equilibrium GDP?

List the five categories of federal government expenditures.

What is the difference between fiscal policy and monetary policy?