Econ Final 13
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32 terms
Terms | Definitions |
|---|---|
 When the Federal government uses taxation and spending actions to stimulate the economy it is conducting: | Fiscal policy |
| When the Federal government takes budgetary action to stimulate the economy or rein in inflation, such policy is: | Discretionary Fiscal Policy |
| When changes in taxes and government spending occur in the economy without explicit action by Congress, such policy is: | Nondiscretionary |
| Fiscal policy is enacted through changes in: | Taxation and government spending |
| The group that often initiates changes in fiscal policy is the: | Council of Economic Advisors |
| If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n): | Expansionary fiscal policy |
| If the U.S. Congress passes legislation to raise taxes to control demand-pull inflation, then this would be an example of a(n) | Contractionary fiscal policy |
| The set of fiscal policies that would be most contractionary would be a(n): | Decrease in government spending and an increase in taxes |
| The intent of contractionary fiscal policy is to: | Decrease aggregate demand |
| The goal of expansionary fiscal policy is to increase: | Real GDP |
| If the government wishes to increase the level of real GDP, it might reduce: | Taxes |
| If the economy is in a recession and prices are relatively stable, then the discretionary fiscal policy or policies that would most likely be recommended to correct this macroeconomic problem would be: | Increased government spending or decreased taxation, or a combination of the two actions |
| The economy starts out with a balanced Federal budget. If the government then implements expansionary fiscal policy, then there will be a: | Budget deficit |
| When government spending is increased, the amount of the increase in aggregate demand primarily depends on: | The size of the multiplier |
| If a government wants to pursue an expansionary fiscal policy, then a tax cut of a certain size will be more expansionary when the: | Economy's MPS is small |
| Which of the following is an example of built-in stability? As real GDP decreases, income tax revenues: | Decrease and transfer payments increase |
| If government tax revenues automatically change in a countercyclical direction over the course of the business cycle, this would be called a(n): | Built-in fiscal stabilization |
| The so-called "negative taxes" are better known as: | Transfer payments |
| Due to automatic stabilizers, when income rises, government transfer spending: | Decreases and tax revenues increase |
| Assume that the economy is in a recession and there is a budget deficit. A strict balanced-budget amendment that would require the Federal government to balance its budget during a recession would be: | Contractionary and worsen the effects of the recession |
| The last year when there was a surplus in the actual U.S. Federal budget was in: | 2001 |
| The American Recovery and Reinvestment Act of 2009 included mostly: | Increases in government spending and decreases in taxes |
| One timing problem with fiscal policy to counter a recession is a "recognition lag" that occurs between the: | Start of the recession and the time it takes to recognize that the recession has started |
| One timing problem with fiscal policy to counter a recession is an "operational lag" that occurs between the: | Time fiscal action is taken and the time that the action has its effect on the economy |
| One timing problem with fiscal policy to counter a recession is an "administrative lag" that occurs between the: | Time the need for the fiscal action is recognized and the time that the action is taken |
| The time which elapses between the beginning of a recession or an inflationary episode and the identification of the macroeconomic problem is referred to as a(n): | Recognition lag |
| The lag between the time the need for fiscal action is recognized and the time action is taken is referred to as the: | Administrative lag |
| Proponents of the notion of a "political business cycle" suggest that: | A possible cause of economic fluctuations is due to the use of fiscal policy for political purposes |
| State and local governments are limited in their ability to respond to recessions because of: | Constitutional and other requirements to balance their budgets |
| The crowding-out effect suggests that: | Increases in government spending may reduce private investment |
| The crowding-out effect arises when: | Government borrows in the money market, thus causing an increase in interest rates |
| The crowding-out effect works through interest rates to: | Decrease the effectiveness of expansionary fiscal policy |
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