Econ Ch. 32

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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


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