Exam 20: Fiscal Policy and Monetary Policy

Ignoring any supply-side effects,if government expenditure on goods and services decreases by $10 billion and taxes decrease by $10 billion,then real GDP ________ and the price level ________.

When the government's expenditures exceed its tax revenue,the budget

When the economy is in a recession,the Fed can ________ the federal funds rate,which ________ aggregate demand and ________ real GDP.

As the Fed lowers the federal funds rate,

Need-based spending ________ during an expansion and ________ during a recession,which leads to larger budget deficits during the ________ phase of the business cycle.

A fall in the federal funds rate leads to

The magnitude of the government expenditure multiplier is ________ the magnitude of the tax multiplier.

The steps in the transmission of monetary policy are

Automatic stabilizers include

What are automatic stabilizers? How do they affect the budget deficit and/or budget surplus during a recession and during an expansion?

If the Fed raises the federal funds rate,

Which has a larger effect on aggregate demand: an increase in government expenditure or an equal sized decrease in taxes? Explain your answer.

The tax multiplier is the

Which of the following is an example of an automatic fiscal policy action?

Explain the role the Fed,Congress,and the President play in making monetary policy.

An increase in government expenditure can ________ potential GDP and an increase in taxes can ________ potential GDP.

In a recession,needs-tested spending ________ and induced taxes ________.

Discretionary fiscal policy is a fiscal policy action,such as

If the Fed increases the quantity of money and lowers the federal funds rate,real GDP ________ and the price level ________.

An increase in income taxes ________ employment and ________ potential GDP.