Economy: Chapter 16

Part of the spending on the Caldecott Tunnel project in northern California came from the American Reinvestment and Recovery Act (enacted to help the country emerge from a recession), which is an example of ________ aimed at increasing real GDP and employment.

Which of the following would be classified as fiscal policy?

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

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

A decrease in the marginal income tax rate in order to help the economy is a fiscal policy which will increase aggregate expenditure.

The tax system serves as an automatic stabilizer over the course of the business cycle.

Government transfer payments include which of the following?

Fiscal policy is determined by

Expansionary fiscal policy involves

An increase in individual income taxes ________ disposable income, which ________ consumption spending.

Which of the following is considered contractionary fiscal policy?

Contractionary fiscal policy is used to decrease aggregate expenditure in an attempt to fight rising inflation.

Lowering the individual income tax will increase household disposable income and consumption spending.

Expansionary fiscal policy involves increasing government purchases or increasing taxes.

The use of fiscal policy to stabilize the economy is limited because

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

Crowding out refers to a decrease in government purchases as a result of an increase in private expenditures.

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

During 1970-1997, 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 ________.

The federal government debt equals

Which of the following is a reason why we should consider the federal national debt a problem?

Increasing the federal budget deficit will contribute to increasing the federal government debt.