Chapter 14 Fiscal Policy

Fiscal policy attempts to achieve all of the following objectives except​ ______. A. sustained economic growth B. full employment C. a stable money supply D. price level stability

An economy is at a short- run equilibrium as illustrated in the figure. An appropriate fiscal policy option to move the economy to full employment is to increase A. tax rates and move the economy to a full- employment equilibrium at point b. B. lower the interest rate by increasing the quantity of money and move the economy to a full- employment equilibrium at point b. C. tax rates and move the economy to a full- employment equilibrium at point c. D. government expenditure and move the economy to a full- employment equilibrium at point b. E. government expenditure and move the economy to a full- employment equilibrium at point c.

In order to help the economy recover from a recession using fiscal​ policy, the government can​ ________ so that aggregate demand increases. A. decrease the quantity of money B. raise interest rates C. cut taxes D. raise taxes E. cut government expenditure on goods and services

______the use of the federal budget to achieve macroeconomic objectives such as full​ employment, sustained economic​ growth, and price level stability is made by​ ______ on an annual timeline. A. Fiscal policy and monetary policy​ are; the​ President, Chairman of the​ Fed, and Congress B. Fiscal policy​ is; the​ President, Vice-President,​ Cabinet, Chairman of the​ Fed, and Congress C. Fiscal policy​ is; the President and Congress D. Fiscal policy and monetary policy​ are; the​ President, Vice-President,​ Cabinet, Chairman of the​ Fed, and Congress

The table shows the receipts and the outlays of a nation at each level of real GDP. What is the budget deficit when real GDP is ​$4 ​trillion? When real GDP is ​$4 ​trillion, the budget deficit is ​$___ trillion.

A tax on labor income​ ______. The equilibrium quantity of labor​ ______. A. decreases the supply of​ labor; decreases. B. decreases the demand for​ labor; decreases C. decreases the supply of labor and increases the demand for​ labor; increases D. decreases the supply of labor and increases the demand for​ labor; decreases At the new equilibrium quantity of​ labor, the​ before-tax wage rate _____ and the​ after-tax wage rate ____ .

An economy is experiencing a recessionary gap. The government can​ ______. A. raise taxes or decrease the quantity of money to decrease​ long-run aggregate supply B. increase expenditure or cut taxes to increase aggregate demand C. increase expenditure or cut taxes to increase​ short-run aggregate supply D. raise taxes to decrease​ long-run aggregate supply

Taxes and​ needs-tested spending work as automatic fiscal policy to dampen the business cycle because taxes​ ______ during an​ expansion, and​ needs-tested spending​ ______ during a recession. A. ​decrease; decreases B. ​increase; decreases C. ​decrease; increases D. ​increase; increases

At the end of 2011 ​, the government of China ​'s debt was yen 12.2 trillion . ​(yen is yuan ​, the currency of China ​). In 2012 ​, the government spent yen 12.7 trillion and ended the year with a debt of yen 11.6 trillion . How much did the government receive in tax revenue in 2012 ​? The government received yen ________ trillion in tax revenue in 2012 .

f the economy is in equilibrium with real GDP less than potential​ GDP, there is​ ________ gap and a fiscal policy that​ ________ is appropriate. A. an​ inflationary; increases aggregate demand B. a​ recessionary; increases aggregate demand C. a​ recessionary; increases potential GDP D. a​ recessionary; decreases aggregate demand E. an​ inflationary; decreases aggregate demand

A decrease in the tax on capital income​ ______ the real interest rate and​ ______ investment and economic growth. A. ​decreases; decreases B. ​decreases; increases C. ​increases; increases D. ​increases; decreases