Exam 12: Fiscal Policy

All of the following might be effective in eliminating a contractionary gap except one.Which is the exception?

Unemployment insurance is an example of governmental discretionary fiscal policy.

The Cash for Clunkers program provided motorists with a cash incentive to trade-in vehicles that got fewer than 18 miles per gallon for more fuel efficient vehicles.

It has been estimated that the marginal propensity to consume out of tax rebate money is around 1/3.

The effect of automatic stabilizers on the business cycle is to

An automatic stabilizer

People will be likely to spend a higher percentage of any additional income when

Which of the following does not limit the effectiveness of discretionary fiscal policy?

Which of the following is not a goal of fiscal policy?

After the Great Depression,the role of fiscal policy in the U.S.economy was changed as a result of

If net taxes exceed government purchases,

Although discretionary fiscal policy worked fairly well in the U.S.in the 1960s,it worked even better during the stagflation years of the 1970s.

Other things constant,a decrease in real GDP demanded is caused by a(n)

If government purchases increase and net taxes decrease,

A temporary tax cut would not be effective in stimulating aggregate demand if

Which of the following had the greatest impact in pulling the U.S.economy out of the Great Depression?

When net taxes increase and government purchases decrease,

What set of policies could the government use to close an expansionary gap?

If the economy is already at its potential output,then the spending multiplier is

Expansionary and contractionary gaps are automatically eliminated by shifts in aggregate demand.