ECON&202 Homework #4 – Flashcards

Built-in stability is exemplified by the fact that with a progressive tax system, net tax revenues decrease when GDP decreases.

Which of the following fiscal policy changes would be the most contractionary?

Refer to the diagram, in which Qf is the full-employment output. If aggregate demand curve AD3 describes the current situation, appropriate fiscal policy would be to:

Discretionary fiscal policy is often initiated on the advice of the:

Other things equal, an increase of Treasury bonds from $100 billion to $120 billion in the economy would:

When Social Security contributions have exceeded payouts in the past, the excess amounts were used to help finance the Federal government's budget deficits.

The so-called crowding-out effect refers to government spending crowding out private investment spending.

The United States has experienced both budget surpluses and deficits since 2000.

Refer to the diagram. Discretionary fiscal policy designed to slow the economy is illustrated by:

When current tax revenues exceed current government expenditures and the economy is achieving full employment:

(Last Word) In 1960 the ratio of workers to Social Security and Medicare beneficiaries was ______; by 2040 it is projected to be _________.

Refer to the data. The 10 percent proportional tax on income would cause:

The American Recovery and Reinvestment Act of 2009 is a clear example of:

Which one of the following might offset a crowding-out effect of financing a large public debt?

It is possible for an increase in government spending to encourage, instead of crowding out, private investment.

The political business cycle refers to the possibility that:

Refer to the diagram. The equilibrium level of GDP is:

When the Federal government uses taxation and spending actions to stimulate the economy it is conducting:

Refer to the diagram, in which Qf is the full-employment output. If aggregate demand curve AD2 describes the current situation, appropriate fiscal policy would be to:

As of 2012, more than half of the total debt of the U.S. government was owed to foreigners.

According to Congressional Budget Office (CBO) projections:

The American Recovery and Reinvestment Act of 2009 was implemented primarily to:

The average tax rate required to service the public debt is roughly measured by:

An economist who favors smaller government would recommend:

If the MPS in an economy is .1, government could shift the aggregate demand curve rightward by $40 billion by:

An increase in the cyclical deficits will automatically increase the cyclically adjusted budget deficit.

A major reason that the public debt cannot bankrupt the Federal government is because:

If the government wants to reduce unemployment using fiscal policy, it may do so by increasing government spending.

Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $100 billion. To achieve full-employment output (exactly), government should:

Answer the question on the basis of the following sequence of events involving fiscal policy: (1) The composite index of leading indicators turns downward for three consecutive months, suggesting the possibility of a recession. (2) Economists reach agreement that the economy is moving into a recession. (3) A tax cut is proposed in Congress. (4) The tax cut is passed by Congress and signed by the president. (5) Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover. Refer to the information. The operational lag of fiscal policy is reflected in event(s):

The concept of a "political business cycle" implies a misuse of fiscal policy making it a source of economic instability.

Refer to the data. A 10 percent proportional tax on income would:

The portion of the public debt owed to foreigners does not represent any real economic burden to Americans because we received money from foreigners when we incurred the debt.

Refer to the data in the table above. The direction of fiscal policy became more contractionary from:

The U.S. public debt:

Contractionary fiscal policy is so named because it:

The lag between the time that the need for fiscal action is recognized and the time action is actually taken is referred to as the:

Which of the following fiscal policy actions is most likely to increase aggregate supply?

Which of the following fiscal policy actions is most likely to increase aggregate supply?

A contractionary fiscal policy shifts the aggregate demand curve leftward.

The goal of expansionary fiscal policy is to increase:

Refer to the table for a fictional economy. The changes in the budget conditions between 2000 and 2001 best reflect:

Expansionary fiscal policy will tend to reduce the budget deficit.

An increase in the public debt and its subsequent repayment will tend to:

The federal budget deficit is found by:

Through the start of 2009, Social Security revenues exceeded payouts, and the excess inflow was used to buy:

The crowding-out effect of the public debt may be dampened if the investment-demand curve is shifting to the right.

As measured by the cyclically adjusted budget, the U.S. government engaged in a contractionary fiscal policy in 2005 and 2006.

The crowding-out effect tends to be stronger when the economy:

Refer to the above graph. If the economy was initially in equilibrium at point 3 and a government deficit makes interest rates increase by 4 percentage points, then the crowding-out effect would be a reduction of: