logo image Write My Paper

Ch 16 Review

Fiscal policy refers to
federal taxes and purchases that are intended to achieve macroeconomics policy objectives
16-1. Suppose the economy is in a short0run equilibrium above potential GDP and automatic stabilizers move the economy back to long-run equilibrium. Using static AD-AS model in the figure above, this would be depicted as a movement from
C to B
If the economy is falling below potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
government purchases
If the tax multiplier is -1.5 and $200 billion tax increase is implemented, what is the change in GDP , holding everything else constant? (Assume the price level stays constant)
A $300 billion decrease in GDP
The government purchases multiplier equals change in (blank) divided by the change in (blank)
equilibrium real GDP; government purchases
Figure 6-4. In the graph above, the shift AD 1 to AD 2 represents the total change in aggregate demand. If government purchases increased by $50 billion, then the distance from point A to point B (blank) $50 billion
would be greater than
Refer to Figure 16-1. An increase in taxes would be depicted as a movement from (blank), using the static AD-AS model in the figure above
B to A
16-1. Suppose the economy is in short-run equilibrium above potential GDP and wages and prices are rising. If contractionary policy is used to move the economy back to long run equilibrium, this would be depicted as a move from (blank) using the static AD-AS mode
C to B
Tax cuts on business income (blank) aggregate
would increase
16-1. Suppose the economy is in the short-run equilibrium below potential GDP and Congress and the president lower taxes to move the economy back to long-run equilibrium. Using the static AD-AS model in the figure above, this would be depicted as a movement from
A to B
Tax cuts on business income increase aggregate demand by increasing
business investment spending
Suppose congress increased spending by $100 billion and raised taxes by $100 billion to keep the budget balanced. What will happen to real equilibrium GDP?
Real equilibrium GDP will rise
The multiplier effect refers to the series of
induced increases in consumption spending that result from an initial increase in autonomous expenditures
The tax multiplier equals the change in (blank) divided by the change in (blank)
equilibrium real GDP; taxes
An increase in government purchases will increase aggregate demand because
government expenditures are a component of aggregate demand
If real GDP exceeded potential real GDP and inflation was increasing, which of the following would be an appropriate fiscal policy
an increase in taxes
Which of the following would NOT be considered an automatic stabilizer
legislation increasing funding for job retraining passed during a recession
Expansionary fiscal policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be (blank) and real GDP to be (blank)
higher;higher
Which of the following would be most likely to induce Congress and the president to conduct contractionary fiscal policy?
increase in inflation
Expansionary fiscal policy
can be effective in the short run
Congress and the president carry out fiscal policy through changes in
government purchases and taxes
The aggregate demand curve will shift to the left (blank) the initial decrease in government purchases
by more than
Crowding out refers to a decline in (blank) as a result of an increase in (blank)
private expenditures; government purchases
16-1. Suppose the economy is in a recession and expasionary fiscal policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from
A to B
Suppose real GDP is $12.6 trillion and potential GDP is $12.4 trillion. To move the economy back to potential GDP, Congress should
lower government purchases by an amount less than $200 billion
Contractionary fiscal policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be (blank) and real GDP to be (blank)
lower;lower
Which of the following is an objective of fiscal policy
high rates of economic growth
Which of the following would be classified as fiscal policy
The federal government cuts taxes to stimulate the economy
Expansionary fiscal policy involves
increasing government purchases or decreasing taxes
Fiscal policy is determined by
Congress and the president
Which of the following is considered contractionary fiscal policy
Congress increases the income tax rate

Need essay sample on "Ch 16 Review"? We will write a custom essay sample specifically for you for only $ 13.90/page

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy close