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competition #6

Terms in this set (71)

Which is a government transfer
c Social Security payments to retired auto workers
All are sources of state and local tax revenue EXCEPT?
a social insurance taxes
Which is NOT an example of government transfers?
d reimbursement of personal income tax withheld from wages
Government payments to households for which no good or service is provided in return are called
a transfer payments
A change in taxes or a change in government transfers affects consumption through a change in
c disposable income
The basic equation of national income accounting is GDP = C + I + G + X - IM. When the government uses fiscal policy to make changes to taxes and transfers, this policy primarily affects
c C
Which is NOT a method of fiscal policy
d changes in the money supply
If the current level of real GDP lies below potential GDP, then an appropriate fiscal policy would be to increase _____, which will shift the _____ curve to the _____.
d government purchases; AD; right
Suppose the economy is in an inflationary gap. To move equilibrium aggregate output closer to the level of potential output, the best fiscal policy option is to:
b decrease government purchases
(Figure: Short- and Long-Run Equilibrium) According to the figure Short- and LongRun Equilibrium, if the economy is at equilibrium at E1, the government should use __________ fiscal policy to shift the aggregate demand curve to the ________.
a expansionary; right
(Figure: Short- and Long-Run Equilibrium) According to the figure Short- and LongRun Equilibrium, if the economy is at equilibrium at E1, the appropriate policy to return the economy to potential output would be a(n):
a increase in transfer payments
If the economy is at equilibrium below potential output, there is a(n):
a recessionary gap and expansionary fiscal policy is appropriate
A reduction in government transfers ________, therefore shifting the aggregate demand curve to the ________.
d decreases disposable income and consumption; left
A cut in taxes ________, therefore shifting the aggregate demand curve to the ________.
b increases disposable income and consumption; right
According to the figure Fiscal Policy I, suppose that this economy is in equilibrium at E1. If there is an increase in government purchases, then:
c AD1 will shift to the right, causing an increase in the price level and an increase in real GDP
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