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Terms in this set (12)
In a macroeconomic context, what are implicit liabilities?
payments that the Federal Government undertakes only during periods of recession
the amount of money that firms collectively owe to shareholders
money that the government has promised to pay in the future
money owed to people possessing government issued bonds
payments that the Federal Government undertakes only during periods of recession
the amount of money that firms collectively owe to shareholders
money that the government has promised to pay in the future
money owed to people possessing government issued bonds
If the government is required to balance the budget and the economy falls into a recession, which of the actions is a feasible policy response?
invest in infrastructure
cut spending equal to the reduction in tax revenue
increase government spending to stimulate the economy
cut taxes to encourage consumer spending
invest in infrastructure
cut spending equal to the reduction in tax revenue
increase government spending to stimulate the economy
cut taxes to encourage consumer spending
What is a likely consequence of this policy?
There is hyperinflation due to an increase in aggregate demand.
The negative consequences of the recession are magnified.
Unemployment falls due to the economic stimulus.
Consumer spending increases due to their ability to keep more of their after-tax income.
There is hyperinflation due to an increase in aggregate demand.
The negative consequences of the recession are magnified.
Unemployment falls due to the economic stimulus.
Consumer spending increases due to their ability to keep more of their after-tax income.
Categorize the scenarios as either a discretionary act or the result of automatic stabilizers.
a. A recession increases the number of recipients of unemployment benefits.
b. A law is enacted that increases government spending on health‑care programs.
c. Legislators increase the generosity of unemployment benefits.
d. Economic growth increases personal and corporate income, increasing tax payments.
a. A recession increases the number of recipients of unemployment benefits.
b. A law is enacted that increases government spending on health‑care programs.
c. Legislators increase the generosity of unemployment benefits.
d. Economic growth increases personal and corporate income, increasing tax payments.
Rather than simply comparing government revenues and tax receipts, analysts are sometimes interested in the "cyclically adjusted" budget balance.
What does it mean to consider the cyclically adjusted budget balance?
The cyclically adjusted budget balance accounts for what the budget balance would be in terms of spending patterns attributable to variations in the lunar cycle.
The cyclically adjusted budget balance accounts for decreases in tax revenues that occur during economic expansions and increases in tax revenues that occur during recessions.
The cyclically adjusted budget balance accounts for what the budget balance would be in terms of changes in the budget attributable to a university presidential election cycle.
The cyclically adjusted budget balance accounts for what the budget balance would be in terms of the total value of goods and services produced in an economy at the potential output.
What does it mean to consider the cyclically adjusted budget balance?
The cyclically adjusted budget balance accounts for what the budget balance would be in terms of spending patterns attributable to variations in the lunar cycle.
The cyclically adjusted budget balance accounts for decreases in tax revenues that occur during economic expansions and increases in tax revenues that occur during recessions.
The cyclically adjusted budget balance accounts for what the budget balance would be in terms of changes in the budget attributable to a university presidential election cycle.
The cyclically adjusted budget balance accounts for what the budget balance would be in terms of the total value of goods and services produced in an economy at the potential output.
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