Econ Ch. 32
During a recession, if a government uses an expansionary fiscal policy to increase GDP, the
aggregate demand curve will shift to the right
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
If a government reduces taxes in order to increase the level of aggregate demand, what type of fiscal policy is being used?
expansionary
If a country's GDP increases, but its debt also increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes.
increase or decrease
What term is used to describe a tax that collects a greater share of income from those with high incomes than from those with lower incomes?
progressive tax
If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is
proportional
If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is
regressive
Which of the following refers to a tax in which people with higher incomes pay a smaller share of their income in tax?
regressive tax
When increasing oil prices cause aggregate supply to shift to the left, then
unemployment and inflation increase
Which of the following characteristics relate to budget deficit?
when the federal government spends more than it collects in taxes in a given year