Macro Exam 3
When changes in taxes and government purchases occur in the economy without explicit action by Congress, such changes are referred to as... (ch.8)
automatic stabilizers
The time that elapses between the beginning of a recession or an inflationary episode and the identification of the macroeconomic problem is referred to as a(n)... (ch.8)
recognition lag
Due to automatic stabilizers, when the nation's total income rises, government transfer payments... (ch.8)
decrease and tax revenues increase
Which of the following is a an example of built-in stability? As real GDP decreases... (ch.8)
income tax revenues and transfer payments increase
One timing problem in using fiscal policy to counter a recession is the "recognition lag" that occurs between the... (ch.8)
start of the recession and the time it takes to recognize the recession has started
If the economy falls into a recession, automatic stabilizers will cause... (ch.8)
tax receipts to fall and gov't to rise
When government purchases are increased, the amount of the increase in aggregate demand primarily depends on... (ch.8)
the size of the multiplier/ the size of the marginal propensity to consume
Using fiscal policy to stabilize the economy is difficult because... (ch.8)
there are time lags involved in the use of fiscal policy