Exam 9: The Government and Fiscal Policy

Refer to the information provided in Table 9.8 below to answer the questions that follow. Table 9.8 All Figures in Billions of Dollars -Refer to Table 9.8. The economy is at the equilibrium level of output. If government spending increases by $200 billion, the new equilibrium level of output is

Refer to the information provided in Figure 9.1 below to answer the questions that follow. Figure 9.1 -Refer to Figure 9.1. The equilibrium level of aggregate expenditure is $________ billion.

Suppose that in the beginning of 2016 the federal debt was $9 trillion. During 2016, the government balanced its budget. At the end of 2016, the federal debt

Refer to the information provided in Table 9.2 below to answer the questions that follow. Table 9.2 -Refer to Table 9.2 At the equilibrium level of income, leakages equal ________ billion.

Refer to the information provided in Figure 9.5 below to answer the questions that follow. Figure 9.5 -Refer to Figure 9.5. The government spending multiplier equals ________ and the tax multiplier equals ________.

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. What is the value of the tax multiplier?

You are hired by the Bureau of Economic Analogies (BEA) as an economic consultant. The Chairperson of the BEA tells you that he believes the current unemployment rate is too low. The unemployment rate can be increased if aggregate output decreases. He wants to know what policy to pursue to decrease aggregate output by $50 billion. The best estimate he has for the MPC is 0.9. Which of the following policies should you recommend?

Refer to the information provided in Figure 9.3 below to answer the questions that follow. Figure 9.3 -Refer to Figure 9.3. The expenditure multiplier is

If the tax multiplier is -4 and taxes are reduced by $35 billion, output

The Peruvian economy can be characterized by Equation 9.4. EQUATION 9.4: C = 400 + 0.6Yd Taxes = 600 Equilibrium Output = $4,000 -Refer to Equation 9.4. At equilibrium, government purchases in Peru is

Refer to the information provided in Figure 9.1 below to answer the questions that follow. Figure 9.1 -Refer to Figure 9.1. At equilibrium, injections

Refer to the information provided in Figure 9.5 below to answer the questions that follow. Figure 9.5 -Refer to Figure 9.5. If the economy is in equilibrium and the government decreases spending by $100 billion, equilibrium aggregate output decreases to $________ billion.

If the economy's full-employment output is $12 trillion, actual output is $10 trillion, and the budget deficit is $2 trillion, the deficit in this case is known as a

Refer to the information provided in Figure 9.1 below to answer the questions that follow. Figure 9.1 -Refer to Figure 9.1. Suppose that the consumption function is C = 400 + 0.5Yd and taxes are $200 billion, at equilibrium the value of injections are

If the MPC is 0.6, the tax multiplier is

Refer to the information provided in Table 9.6 below to answer the questions that follow. Table 9.6 All Figures in Billions of Dollars -Refer to Table 9.6. The MPS

You are hired by the Council of Economic Advisors (CEA) as an economic consultant. The chairperson of the CEA tells you that she believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. She wants to know what policy to pursue to increase aggregate output by $800 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should you recommend?

Refer to the information provided in Table 9.5 below to answer the questions that follow. Table 9.5 All Numbers are in $ Million -Refer to Table 9.5. The equilibrium level of aggregate output is $________ million.

During a recession, automatic stabilizers cause the federal deficit to

If the economy is in a recession, the actual deficit is ________ than the full employment deficit.