Exam 20: Fiscal Policy and Monetary Policy

The government expenditure multiplier and the tax multiplier are

When the government's outlays exceed its tax revenue,the national debt

To fight a recession,the Fed can

In a recession,the Fed's monetary policy aims to ________ the real interest rate,________ aggregate demand,and ________ aggregate supply.

When the Fed lowers the federal funds rate and the real interest rate falls,what happens to the opportunity cost of investment? What happens to investment?

National debt decreases in a given year when a country has

If the Fed raises the federal funds rate,eventually the

-The above table gives the government outlays and tax revenues from 2008 through 2012 for two countries.In 2011 country A had a ________ and country B had a ________.

If government expenditures on goods and services increases by $20 billion,then aggregate demand

When government outlays exceed tax revenues,does the government have a budget deficit or surplus?

The supply-side effects show that a tax cut on labor income ________ employment and ________ potential GDP.

-Does the figure above illustrate a recessionary or an inflationary gap? What do potential GDP and real GDP equal? What is an appropriate fiscal policy to restore real GDP to potential real GDP?

If the Fed raises the federal funds rate,which of the following occurs?

When the economy is in a recession,________ taxes decrease while ________ spending increases and,as a result of this automatic fiscal policy,aggregate demand ________.

Automatic changes in tax revenues and expenditures that occur as a result of fluctuations in real GDP are referred to as automatic

The Fed decreases the quantity of money to counteract

List and briefly explain the steps in how monetary policy affects real GDP in the AS/AD model using as your example the case when the Fed eases monetary policy to fight a recession.

The magnitude of the tax multiplier is smaller than the magnitude of the government expenditure multiplier because

Automatic stabilizers are defined as

If government expenditure increases by $200 billion and taxes simultaneously increase by $200 billion,then aggregate demand