Can be described as changes in government spending and taxes to acgirve macroeconomic policy objectives
question
Who is responsible for fiscal policy?
answer
The federal government
question
Which of the following statements is most accurate regarding fiscal policy and monetary policy?
answer
Fiscal policy includes changed in government spending snd taxes and is controlled by the federal government. Monetary policy includes changed in the money supply and interest rates and is controlled by the Federal Reserve. Both policies are intended to achieve macroeconomic objectives.
question
When the economy is experiencing an expansion automatic stabilizers will cause:
answer
Transfer payments to decrease and tax revenues to increase
question
Some spending and taxes increase or decrease with the business cycle. This event often has an effect on the economy that is similar to fiscal policy and is called
answer
Automatic stabilizers
question
Government spending and taxes that increase or decrease without any actions taken by the government are referred to as
answer
Automatic stabilizers
question
Changes in taxes and spending that happen without actions by the government are called
answer
Automatic stabilizers
question
If the government cuts taxes in order to increase aggregate demand, the action is called
answer
A discretionary fiscal policy
question
What is an expansionary fiscal policy?
answer
increasing government spending and decreasing taxes to increase aggregate demand
question
What is a contractionary fiscal policy?
answer
decreasing government spending and increasing taxes to decrease aggregate demand
question
If congress and the president decide an expansionary fiscal policy is necessary, what changes should they make in government spending or taxes?
answer
Policies that increase govt spending and decrease taxes
question
Is it possible for congress and the president to carry out an expansionary fiscal policy if the money supply does not increase?
answer
Yes, because fiscal policy and monetary policy are separate things
question
Over time, potential GDP _____, which is shown by the ______ curve shifting to the right.
answer
Increases; long-run aggregate supply
question
Why does a$1 increase in government purchases lead to more than a $1 increase in income and spending?
answer
Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to an increase in induced spending.
question
As the tax rate increases,
answer
the multiplier effect decreases.
question
What is meant by supply-side economics?
answer
Refers to the use of taxes to increase incentives to work, save, invest, and start a business in order to increase long-run aggregate supply
question
Which of the following statements about the federal debt is correct?
answer
If debt becomes very large relative to the economy, then the government may have to raise to high levels or reduce other types of spending to make the interest payments on the debt.
question
The national debt is best measured as
answer
The total value of U.S. Treasury securities outstanding
question
When is it considered "good policy" for the government to run a budget deficit?
answer
When borrowing is used for long-lived capital goods
question
The term "crowding out" refers to a situation where:
answer
Government spending increases interest rates and decreases private investment
Haven't found what you need?
Search for quizzes and test answers now
Quizzes.studymoose.com uses cookies. By continuing you agree to our cookie policy
