Exam 13: Fiscal Policy, Deficits, and Debt

If a government wants to pursue an expansionary fiscal policy, then a tax cut of a certain size will be more expansionary when the:

In Year 1, the actual budget deficit was $200 billion and the cyclically-adjusted deficit was $150 billion. In Year 2, the actual budget deficit was $225 billion and the cyclically-adjusted deficit was $175 billion. It can be concluded that fiscal policy from Year 1 to Year 2 became more:

If the economy is to have significant built-in stability, then when real GDP increases, the tax revenues should:

Refer to the above graph. What combination would most likely cause a shift from AD₁ to AD₂?

Medicare and Social Security are similar in the following respects, except:

As of 2012, most of the U.S. Federal debt was owed to:

Contractionary fiscal policy would tend to make a budget deficit become:

The following is an investment schedule. Investment spending is in billions of dollars. Refer to the data in the table above. When the government runs a budget deficit and issues more Treasury securities, crowding out would occur if:

Crowding out is a decrease in private investment caused by:

The key to assessing whether fiscal policy is expansionary or not is to observe the change in the cyclically-adjusted budget balance.

You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $400 billion; (2) investment = $40 billion; (3) government purchases = $90 billion; and (4) net export = $25 billion. If the full-employment level of GDP for this economy is $600 billion, then what combination of actions would be most consistent with closing the GDP-gap here?

There is general agreement among economists that a proposed fiscal policy should be evaluated for its:

Most economists believe that fiscal policy is:

Which combination of fiscal policy actions would most likely offset each other?

The lag between the time that the need for fiscal action is recognized and the time action is actually taken is referred to as the:

When the Federal government uses taxation and spending actions to stimulate the economy it is conducting:

The economic burden of World War II for the United States was primarily:

The crowding-out effect works through interest rates and it tends to:

Refer to the above graph. The economy is initially at point 1. Which of the following events would cause a shift that would help offset the crowding-out effect? An increase in:

If the cyclically-adjusted budget shows a deficit zero and the actual budget shows a deficit of about $150 billion, it can be concluded that there is: