which of the following is a potential flaw of fiscal policy?
  • the crowding-out effect.
  • recognition lag
  • Restricting immigration of skilled working-age adults.
  • the crowding-out effect
increases in which of the following will always accompany a negative GDP gap?
  • budget deficit.
  • full employment output
  • public debt
  • unemployment
If the MPC in an economy is .8, government could shift the aggregate demand curve rightward by $100 billion by:
  • increasing government spending by $4 billion.
  • local and state government
  • the crowding-out effect.
  • decreasing taxes by $25 billion.
Assume the economy is at full employment and that investment spending declines dramatically. If the goal is to restore full employment, government fiscal policy should be directed toward:
  • an excess of government expenditures over tax receipts.
  • Restricting immigration of skilled working-age adults.
  • increasing government spending by $4 billion.
  • Reductions in federal tax rates on personal and corporate income.
what provides the information needed to assess discretionary policy and determine whether it is expansionary, contractionary or neutral?
  • the crowding-out effect.
  • local and state government
  • cyclically adjusted budgets
  • decreasing taxes by $25 billion.
when aggregate demand increases, the price level rises. but when aggregate demand decreases, the price level tends to be inflexible. which of the following effects is described by the above statement
  • the crowding-out effect
  • the crowding-out effect.
  • budget deficit.
  • the ratchet effect
A contractionary fiscal policy is shown as a:
  • is aimed at reducing aggregate demand and thus achieving price stability.
  • deficits during recessions and surpluses during periods of demand-pull inflation.
  • rightward shift in the economy's aggregate demand curve.
  • leftward shift in the economy's aggregate demand curve.
An economist who favors smaller government would recommend:
  • increases in government spending during recession and tax increases during inflation.
  • tax cuts during recession and reductions in government spending during inflation.
  • deficits during recessions and surpluses during periods of demand-pull inflation.
  • is aimed at reducing aggregate demand and thus achieving price stability.
Expansionary fiscal policy is so named because it:
  • is aimed at reducing aggregate demand and thus achieving price stability.
  • is designed to expand real GDP.
  • rightward shift in the economy's aggregate demand curve.
  • involves specific changes in T and G undertaken expressly for stabilization at the option of Congress.
Since 2002, the United States has had:
  • full employment output
  • large federal budget deficits.
  • the crowding-out effect
  • local and state government
An economist who favored expanded government would recommend:
  • is aimed at reducing aggregate demand and thus achieving price stability.
  • increases in government spending during recession and tax increases during inflation.
  • tax cuts during recession and reductions in government spending during inflation.
  • involves specific changes in T and G undertaken expressly for stabilization at the option of Congress.
Contractionary fiscal policy is so named because it:
  • involves specific changes in T and G undertaken expressly for stabilization at the option of Congress.
  • is aimed at reducing aggregate demand and thus achieving price stability.
  • intentional changes in taxes and government expenditures made by Congress to stabilize the economy.
  • leftward shift in the economy's aggregate demand curve.
An expansionary fiscal policy is shown as a:
  • is aimed at reducing aggregate demand and thus achieving price stability.
  • is designed to expand real GDP.
  • leftward shift in the economy's aggregate demand curve.
  • rightward shift in the economy's aggregate demand curve.
The cyclically adjusted budget tells us:
  • Reductions in federal tax rates on personal and corporate income.
  • large federal budget deficits.
  • full employment output
  • what the size of the federal budget deficit or surplus would be if the economy was at full employment.
Suppose that the economy is in the midst of a recession. Which of the following policies would most likely end the recession and stimulate output growth?
  • an excess of government expenditures over tax receipts.
  • Restricting immigration of skilled working-age adults.
  • increasing government spending by $4 billion.
  • Reductions in federal tax rates on personal and corporate income.
The financing of a government deficit increases interest rates and, as a result, reduces investment spending. This statement describes:
  • the crowding-out effect.
  • cyclically adjusted budgets
  • decreasing taxes by $25 billion.
  • the crowding-out effect
A major advantage of the built-in or automatic stabilizers is that they:
  • require no legislative action by Congress to be made effective.
  • increases in government spending during recession and tax increases during inflation.
  • leftward shift in the economy's aggregate demand curve.
  • is aimed at reducing aggregate demand and thus achieving price stability.
the total amount of money owed by the united states treasury to holders of US securities is the total
  • securities
  • unemployment
  • public debt
  • budget deficit.
the federal government's purposeful manipulation of taxes and spending in order stimulate the economy or rein in inflation is known as
  • securities
  • budget deficit.
  • public debt
  • fiscal policy
which are included in the definition of public in regards to the holders of federal debt
  • the crowding-out effect
  • cyclically adjusted budgets
  • decreasing taxes by $25 billion.
  • local and state government
Countercyclical discretionary fiscal policy calls for:
  • involves specific changes in T and G undertaken expressly for stabilization at the option of Congress.
  • leftward shift in the economy's aggregate demand curve.
  • deficits during recessions and surpluses during periods of demand-pull inflation.
  • is aimed at reducing aggregate demand and thus achieving price stability.
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