Fiscal Policy – Flashcards

Contractionary fiscal policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________.

Refer to Figure 16-1. An increase in taxes would be depicted as a movement from ________, using the static AD-AS model in the figure above.

Expansionary fiscal policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be ________ and real GDP to be ________.

Refer to Figure 16-2. In the graph above, if the economy is at point A, an appropriate fiscal policy by the Congress and the president would be to

Refer to Figure 16-1. Suppose the economy is in a recession and expansionary fiscal policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from

Tax increases on business income decrease aggregate demand by decreasing

Fiscal policy is defined as changes in federal ________ and ________ to achieve macroeconomic objectives such as price stability, high rates of economic growth, and high employment.

To combat a recession with discretionary fiscal policy, Congress and the president shoulddecrease taxes to increase consumer disposable income.

Refer to Figure 16-3. 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 the Congress and the president?

Federal government purchases, as a percentage of GDP,

Federal government expenditures, as a percentage of GDP,

Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and no policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from

Which of the following is an appropriate discretionary fiscal policy if equilibrium real GDP falls below potential real GDP?

From the 1960s to 2012, transfer payments

If the economy is growing beyond potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in

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

Which of the following is an example of discretionary fiscal policy?

Refer to Figure 16-2. In the graph above, if the economy is at point A, an appropriate fiscal policy by the Congress and the president would be to

Social Security

The largest source of federal government revenue in 2012 was

Automatic stabilizers refer to

Tax cuts on business income increase aggregate demand by increasing

The fastest growing category of government expenditure is

Part of the spending on the Caldecott Tunnel project in northern California came from the American Reinvestment and Recovery Act, which is an example of discretionary fiscal policy aimed at increasing

Decreasing government spending ________ the price level and ________ equilibrium real GDP.

The increase in government spending on unemployment insurance payments to workers who lose their jobs during a recession and the decrease in government spending on unemployment insurance payments to workers during an expansion is an example of

Tax cuts on business income ________ aggregate demand.

Refer to Figure 16-1. Suppose the economy is in short-run equilibrium below potential GDP and Congress and the president lower taxes to move the economy back to long-run equilibrium. Using the static AD-AS model in the figure above, this would be depicted as a movement from

Fiscal policy refers to changes in

Which of the following is an objective of fiscal policy?

The increase in the amount that the government collects in taxes when the economy expands and the decrease in the amount that the government collects in taxes when the economy goes into a recession is an example of

Refer to Figure 16-1. Suppose the economy is in short-run equilibrium below potential GDP and no fiscal or monetary policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from

The majority of dollars spent by government prior to the Great Depression was spending at the ________ level. In the post World War II period, two-thirds to three quarters of all dollars spent by government in the United States are spent at the ________ level.

Which of the following would be classified as fiscal policy?

Social Security began as a "pay-as-you-go" system, meaning that payments to current retirees were paid

Which of the following is considered contractionary fiscal policy?

Which of the following would not be considered an automatic stabilizer?

Expansionary fiscal policy will

Which of the following statements about the Social Security, Medicare, and Medicaid programs is true

To combat a recession with discretionary fiscal policy, Congress and the president should

The three categories of federal government expenditures, in addition to government purchases, are

Which of the following would be considered an active fiscal policy?

Which of the following is considered expansionary fiscal policy?

Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and automatic stabilizers move the economy back to long-run equilibrium. Using the static AD-AS model in the figure above, this would be depicted as a movement from

The tax increases necessary to fund future Social Security and Medicare benefit payments would be

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 the Congress and the president?

Congress and the president carry out fiscal policy through changes in

A decrease in individual income taxes ________ disposable income, which ________ consumption spending.

Expansionary fiscal policy involves

Active changes in tax and spending by government intended to smooth out the business cycle are called ________, and changes in taxes and spending that occur passively over the business cycle are called ________.

Which of the following is a government expenditure, but is not a government purchase?

An increase in government purchases will increase aggregate demand because

Government transfer payments include which of the following?

Fiscal policy is determined by

As a percentage of GDP, federal expenditures ________ from 1950 to the early 1990s, ________ from 1992 to 2001, and have ________ since 2001.

Part of the spending on the Caldecott Tunnel project in northern California came from the American Reinvestment and Recovery Act, which is an example of ________ aimed at increasing real GDP and employment.

Forecasts by the Congressional Budget Office show spending on Social Security, Medicare, and Medicaid rising from 9.9 percent of GDP in 2013 to ________ percent of GDP in 2087, and by 2087 the federal government will be spending, as a fraction of GDP, ________ on these three programs as it currently spends on all its programs.

If Congress passed a one-time tax cut in order to stimulate the economy in 2014, and tax rate levels returned to their pre-2014 level in 2015, how should this tax cut affect the economy?

Refer to Figure 16-2. In the graph above, if the economy is at point A, an appropriate fiscal policy by the Congress and the president would be to

Refer to Figure 16-2. In the graph above, if the economy is at point A, an appropriate fiscal policy by the Congress and the president would be to

Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and wages and prices are rising. If contractionary policy is used to move the economy back to long run equilibrium, this would be depicted as a movement from ________ using the static AD-AS model in the figure above.

________ and ________ are the largest sources of revenue collected by the federal government.