Ch 16 And 17

Fiscal policy refers to changes in

Which of the following would be classified as fiscal​ policy?

Automatic stabilizers refer to

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

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

The largest and fastestminus−growing category of federal government expenditures is

From the 1960s to​ 2014, transfer payments

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

The largest source of federal government revenue in 2014 was

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.

Which of the following would be considered a fiscal policy​ action?

Expansionary fiscal policy involves

Refer to the diagram to the right. An increase in taxes would be depicted as a movement from​ _______, using the static AD

If the economy is falling below 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 is considered contractionary fiscal​ policy?

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​ ________.

Expansionary fiscal policy will

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

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

If real GDP exceeded potential real GDP and inflation was​ increasing, which of the following would be an appropriate fiscal​ policy?

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​ _________.

Which of the following would be most likely to induce Congress and the president to conduct contractionary fiscal​ policy? A significant

The government purchases multiplier equals the change in​ ________ divided by the change in​ ________.

The tax multiplier equals the change in​ ________ divided by the change in​ ________.

Suppose the government spending multiplier is 2. The federal government cuts spending by​ $40 billion. What is the change in GDP if the price level is not held​ constant?

An increase in government purchases of​ $200 billion will shift the aggregate demand curve to the right by

Suppose real GDP is​ $13 trillion, potential real GDP is​ $13.5 trillion, and Congress and the president plan to use fiscal policy to restore the economy to potential real GDP. Assuming a constant price​ level, Congress and the president would need to increase government purchases by

Crowding out refers to a decline in​ ________ as a result of an increase in​ ________.

The crowding out of government spending by private spending will be greater the

An increase in the sensitivity of private spending​ (consumption, investment, and net​ exports) to changes in the interest rate​ ________ the government purchases multiplier.

Crowding​ out, following an increase in government​ spending, results from​ (the exchange rate is the foreign exchange price of the domestic​ currency)

An increase in government spending may expedite recovery from a recession in the short​ run, but in the long run this policy may

​Historically, the largest U.S. federal budget deficits as a percentage of GDP in the 20th century occurred during

​1997, the U.S. federal government was

A recession tends to cause the federal budget deficit to​ ________ because tax revenues​ ________ and government spending on transfer payments​ _________.

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

The federal government debt equals

The federal government debt as a percentage of GDP fell

If the federal​ government's expenditures are less than its tax​ revenues, then

Government deficits tend to increase during

During​ recessions, government expenditure automatically

The curve showing the short−run relationship between the unemployment rate and the inflation rate is called

According to the short−run Phillips​ curve, the unemployment rate and the inflation rate are

According to the short−run Phillips​ curve, which of the following would result in low rates of​ unemployment?

What is the natural rate of​ unemployment?

In the long​ run, the Phillips curve is a​ ________ at​ ________.