Exam 16: Fiscal Policy

To evaluate the size of the federal budget deficit or surplus over time,it would be best to look at the

In a closed economy with fixed or autonomous (non-income dependent)taxes,the balanced budget government purchases multiplier is negative.

In preparing their estimates of the stimulus package's effect on GDP,Obama administration economists estimated a government purchases multiplier of 1.57.This indicates that a ________ increase in government purchases would increase equilibrium real GDP by $157 billion

An economic expansion tends to cause the federal budget deficit to ________ because tax revenues ________ and government spending on transfer payments ________.

In early 2008,the housing crisis and rising oil prices increased the risk of recession in the United States.What fiscal policy action was taken by Congress and the president to counter these events?

Since the Social Security system began in 1935,the number of workers per retiree has

Which of the following provides health-care coverage to people age 65 and over?

When President Obama took office in January 2009,he pledged to pursue an expansionary fiscal policy to try to pull the economy out of the recession.The next month,Congress passed the American Recovery and Reinvestment Act of 2009,a $840 billion package of ________ that was the largest fiscal policy action in U.S.history.

Figure 16-4 -Refer to Figure 16-4.In the graph above,suppose the economy is initially at point A.The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by Congress and the president?

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.

Prior to the 1930s,the majority of dollars spent by government was spent at the state and local levels.

It is ________ difficult to effectively time fiscal policy than monetary policy because ________.

The cyclically adjusted budget deficit calculates the budget surplus or deficit at

Which of the following would be classified as fiscal policy?

In the case of an upward-sloping aggregate supply curve,the change in real GDP brought about by a change in government spending will be less than that predicted by the simple government purchases multiplier.

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

Which of the following is the largest category of federal government expenditures?

Figure 16-6 -Refer to Figure 16-6.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,Congress and the president would most likely

Identify each of the following as (i)part of an expansionary fiscal policy, (ii)part of a contractionary fiscal policy,or (iii)not part of fiscal policy. a.The personal income tax rate is lowered. b.Congress cuts spending on defense. c.College students are allowed to deduct tuition costs from their federal income taxes. d.The corporate income tax rate is lowered. e.The state of Nevada builds a new tollway in an attempt to expand employment and ease traffic in Las Vegas.

Fiscal policy refers to changes in