Ch 12 - Fiscal Policy - Assignment Essays

question

____________ is producing goods that are used to make other goods.

answer

Investment

question

The economy of Marcovia currently has a GDP of $100 billion. It was anticipated that the potential output of the economy was $125 billion. Marcovia is experiencing a _______ gap; corrective action would be to implement _________ policy.

answer

contractionary; expansionary

question

If the potential output is $250 billion and the current real GDP is $150 billion, then

answer

there is a contractionary gap.

question

Expansionary fiscal policy (___ the aggregate demand curve.)

answer

increases the aggregate demand curve.

question

Government spending is comprised of two basic types: ________ and _________.

answer

discretionary; mandated

question

Which of the following would not be considered to fall under the realm of fiscal policy?

answer

Changes in the overall money supply.

question

If the potential output is $250 billion and the current real GDP is $250 billion, then

answer

the economy is in long-run equilibrium.

question

In general, exports and imports can be manipulated by fiscal policy.
T or F?

answer

False

question

The potential output is $800 billion. The multiplier is three. If the current real GDP is $740 billion, then

answer

the government would increase government spending by $20 billion.

question

The ____________ lag generally is thought to come about due to the time it takes to gather and analyze the economic data of the entire country.

answer

recognition

question

The federal government's largest source of taxation revenue is

answer

personal and corporate taxes.

question

It is anticipated Social Security spending will

answer

increase due to the number of baby boomers who will be retiring soon.

question

Effectiveness Lag

answer

G. Due to the time it takes the multiplier to work

question

Crowding Out

answer

A. A decrease in private investment, due to increased G spending

question

Automatic Stabilizers

answer

D. G spending which requires no new legislative action

question

Discretionary Spending

answer

E. G spending decided in an appropriations bill

question

Implementation Lag

answer

B. Due to the time it takes new laws to be implemented

question

MPS

answer

F. 1 - MPC

question

Multiplier

answer

C. 1 / MPS

question

In the equation for GDP, shown below, the government can directly control which of those elements?
GDP = C + G + I + X - IM

answer

G, I, and C

question

An example of an automatic stabilizer is

answer

tax receipts rising when GDP rises.

question

Purtopia is experiencing a contractionary gap of $100 billion. Purtopia officials have estimated that marginal propensity to consume is 0.60. How much money would the government of Purtopia inject into the economy to "heat" it up?
Answer: $_________ billion

answer

question

The country of Marzonia currently has a real GDP of $500million. It is estimated the potential Marzonia GDP is $450million. This is ___________ gap of $_____________.

answer

a positive output; $50million

question

Reducing federal spending on highways will shift
(AD)

answer

the aggregate demand curve to the left.

question

An increase in government transfers is considered to be an example of _________ fiscal policy because it ___________.

answer

expansionary; shifts the aggregate demand curve to the right

question

If the Marginal Propensity to Consume is 0.8, then the multiplier is _______.

answer

question

The budget of the United States runs on a fiscal year from September 1 until August 31 of the following year.
T or F?

answer

False

question

Which of the items in this listing would be considered a transfer?

answer

Social Security payments to retired workers.

question

The 2008 and 2009 economic stimulus plans were excellent examples of automatic stabilizers.
T or F?

answer

False

question

The economy is currently at it potential output. Consumption spending decreases dramatically and quickly. What would be the most appropriate fiscal policy response?

answer

Increase transfer payments and government spending.

1 of 30

question

____________ is producing goods that are used to make other goods.

answer

Investment

question

answer

contractionary; expansionary

question

If the potential output is $250 billion and the current real GDP is $150 billion, then

answer

there is a contractionary gap.

question

Expansionary fiscal policy (___ the aggregate demand curve.)

answer

increases the aggregate demand curve.

question

Government spending is comprised of two basic types: ________ and _________.

answer

discretionary; mandated

question

Which of the following would not be considered to fall under the realm of fiscal policy?

answer

Changes in the overall money supply.

question

If the potential output is $250 billion and the current real GDP is $250 billion, then

answer

the economy is in long-run equilibrium.

question

In general, exports and imports can be manipulated by fiscal policy.
T or F?

answer

False

question

The potential output is $800 billion. The multiplier is three. If the current real GDP is $740 billion, then

answer

the government would increase government spending by $20 billion.

question

The ____________ lag generally is thought to come about due to the time it takes to gather and analyze the economic data of the entire country.

answer

recognition

question

The federal government's largest source of taxation revenue is

answer

personal and corporate taxes.

question

It is anticipated Social Security spending will

answer

increase due to the number of baby boomers who will be retiring soon.

question

Effectiveness Lag

answer

G. Due to the time it takes the multiplier to work

question

Crowding Out

answer

A. A decrease in private investment, due to increased G spending

question

Automatic Stabilizers

answer

D. G spending which requires no new legislative action

question

Discretionary Spending

answer

E. G spending decided in an appropriations bill

question

Implementation Lag

answer

B. Due to the time it takes new laws to be implemented

question

MPS

answer

F. 1 - MPC

question

Multiplier

answer

C. 1 / MPS

question

In the equation for GDP, shown below, the government can directly control which of those elements?
GDP = C + G + I + X - IM

answer

G, I, and C

question

An example of an automatic stabilizer is

answer

tax receipts rising when GDP rises.

question

answer

question

The country of Marzonia currently has a real GDP of $500million. It is estimated the potential Marzonia GDP is $450million. This is ___________ gap of $_____________.

answer

a positive output; $50million

question

Reducing federal spending on highways will shift
(AD)

answer

the aggregate demand curve to the left.

question

An increase in government transfers is considered to be an example of _________ fiscal policy because it ___________.

answer

expansionary; shifts the aggregate demand curve to the right

question

If the Marginal Propensity to Consume is 0.8, then the multiplier is _______.

answer

question

The budget of the United States runs on a fiscal year from September 1 until August 31 of the following year.
T or F?

answer

False

question

Which of the items in this listing would be considered a transfer?

answer

Social Security payments to retired workers.

question

The 2008 and 2009 economic stimulus plans were excellent examples of automatic stabilizers.
T or F?

answer

False

question

The economy is currently at it potential output. Consumption spending decreases dramatically and quickly. What would be the most appropriate fiscal policy response?

answer

Increase transfer payments and government spending.

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Ch 12 – Fiscal Policy

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