3.3 Quiz

A typical __________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes.

contractionary

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting:

discretionary fiscal policy

If a government reduces taxes in order to increase the level of aggregate demand, what type so fiscal policy is being used?

expansionary

The time it takes to recognize that a recession has occurred is known as __________ __________

recognition lag

A government annually collects $230 billion in tax revenue and allocates $29 billion to its universal healthcare spending. What percentage of this government's budget is spent on healthcare?

12.6% 29/230 *100 = 12.6%

A government annually allocates $5 billion of its total tax revenue to weather related disaster relief, $19 billion to healthcare and $11 billion to education. If the government's quarterly tax revenue is $33 billion, what percentage of its budget is allocated annually to healthcare?

14.39% 33* 4 = 132 19/132 *100 = 14.39%

If Canada's economy moves into an expansion while its economy is producing more than potential GDP, then:

automatic stabilizers will decrease government spending and increase tax revenue

The current level of US government accumulated debt, when measured in nominal dollars:

is higher than it has ever been

A __________ means that government spending and taxes are equal

balanced budget

A __________ is created each time the federal government spends more than it collects in taxes in a given year.

budget deficit