Chap 9&11
An example of discretionary fiscal policy would be
A tax cut adopted to stimulate consumption
The purpose of fiscal policy is to
Alter the direction of the economy
Fiscal policy is purposeful movements in _______ designed to direct an economy
Govt spending and taxes
In 2011, the largest item in the federal budget was
Medicaid
A political problem with discretionary fiscal policy is the
Political business cycle
A continuing resolution allows
Spending to continue as it has been for a specified period of time
Discretionary fiscal policy differs from nondiscretionary fiscal policy in that
The former requires timely decisions whereas the latter is built into the system
What is an example of govt transfer payments?
Unemployment funds paid
Short-run contractionary fiscal policy would result in
AD moving to the left
Short-run expansionary fiscal policy would result in
Aggregate demand moving to the right
Using current services budgeting
An increase in spending is spending greater than that needed to provide an unchanged level of services
Authorization in 2009 of increased federal spending on "shovel-ready" infrastructure projects was intended to speed up the macroeconomic impact of the deficit spending by
Avoiding the lengthy design phase of the projects
Compared to other industrialized nations around the globe, U.S. defense spending as a percentage of GDP is
Substantially higher than that of the next highest nation
An example of nondiscretionary fiscal policy would be
The existence of the progressive federal income tax
How is the federal income tax a progressive tax?
The higher the income a person has, the higher the percentage that person pays in tax
What describes the operational lag?
The time required to get a particular plan implemented with the money getting in peoples hands
What's described as the recognition lag?
The time required to know that there's a recession
If you were to use an aggregate supply aggregate demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a negative aggregate demand shock, you would see the aggregate demand curve move
To the right, back toward its pre-shock position as a result of these policies
What qualifies as an aggregate supply shock
Unexpected increase in oil prices
What qualifies as an aggregate demand shock
Unexpected reduction in consumer confidence
Mandatory spending makes up
Well over half of all spending
Spending on programs for which there is an existing legal obligation is labeled
Mandatory
Projections of the trajectory of discretionary relative to mandatory spending made in 2011 had
Mandatory spendings portion growing
Logrolling occurs when
Members of Congress trade votes to get their programs passed
Fiscal policy is controlled by
Congress and the president
The enormous budget deficits of 2009 through 2011 meant that the federal govt was borrowing upwards of $1.5 trillion per year. If that borrowing has limited the ability of the private sector to get financial capital for its purposes economists would call this
Crowding in
The tax cuts of 2001 and 2003 that came in the form of tax rebate checks are good examples of _____ fiscal policy
Discretionary
Programs such as social security and Medicare
Do not require re-authorization
Which of the following is part of non-defense discretionary spending?
Education and training
What defines a means-tested program?
Eligibility depends on income