Exam 27: Fiscal Policy

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.

A government tax rebate of $1,000 would ________ your disposable income by ________.

In absolute value,the tax multiplier is greater than the government purchases multiplier.

If the government purchases multiplier equals 2,and real GDP is $14 trillion with potential real GDP $14.5 trillion,then government purchases would need to increase by ________ to restore the economy to potential real GDP.

Figure 27-1 -Refer to Figure 27-1.Suppose the economy is in short-run equilibrium below potential GDP and no fiscal or monetary policy is pursued.Using the static AD-AS model in the figure above,this would be depicted as a movement from

If policymakers are concerned that the economy is in danger of rising inflation because aggregate demand is increasing faster than aggregate supply,the appropriate fiscal policy response is to

If Congress wanted to counteract the effects of a recession it could

Federal government purchases,as a percentage of GDP

Which of the following would be classified as fiscal policy?

Which of the following is a government expenditure,but is not a government purchase?

If the economy is falling below potential real GDP,which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in

Figure 27-9 -To combat inflation,Congress and the president should

The majority of the federal government debt is held by government agencies.

The increase in the amount that the government collects in taxes when the economy expands and the decrease in the amount that the government collects in taxes when the economy goes into a recession is an example of

Which of the following best describes supply-side economics?

Tax cuts on business income ________ aggregate demand.

________ and ________ are the largest sources of revenue collected by the federal government.

The total value of U.S.Treasury bonds outstanding equals

A decrease in individual income taxes ________ disposable income,which ________ consumption spending.

The problem typically during a recession is not that there is too little money,but too little spending.If the problem was too little money,what would be its cause? If the problem was too little spending,what could be its cause?